Newspapers Rally Bigtime, no one seems to notice

To accompany the broad stock market rally of Thursday and Friday, newspaper stocks had a fairly remarkable rally of their own. During the last two days GateHouse (GHS) finished up around 33%, McClatchy (MNI) up around 30%, and AH Belo (AHC) was up around 15%. Even some of the of the exchange, near bankruptcy stocks mounted some fairly significant gains on Friday, with Journal Register (JRCO) up some 25% on Friday.

The biggest mover of them all, and the apparent starter of the broader rally was Media General (MEG). Media General surged nearly 120% on Thursday before settling back some 27% on Friday. On Thursday they reported their August revenues, which beat expectations, but still read like a horror story. Reuters and others pinned the rally to this report, but an 120% rally for one month of not completely horrible revenues isn't usually enough to spark that level of movement.

Here are a few theories on why the reasons behind this rally: (I have no information on if any of these could be true)

1. A credible rumor has been spread on one of these companies going private or getting bought out. Alan Mutter recently thought McClatchy might have made some of the moves toward going private, but any of these companies likely want out of the public market spotlight. This is likely, but volume would usually spike more than the approximately double normal these companies experienced
   
2. The broad rally sparked short covering and other systemic purchases. It's not uncommon for stocks to have a faux rally triggered by people unwinding short positions. Since these stocks were particularly strongly shorted, a recent ban on naked shorts may also have contributed.
3. The forsaken nature of these stocks makes them particularly prone to swings from market wide buying. When only 100,000 shares trade on an average day for some of them, an extra 50,000 from an index buy can push them up.
4. There may be a sentiment that newspapers could be the next bailout. Relief from the oppressive debt would help these firms remain solvent a bit longer. It however wouldn't explain AHC's rise given their lack of debt.
5. Valuations have finally been smashed to the level that the stocks look attractive. Most analysts would look crazy for making recommendations, but at some point every stock looks cheap.
   

The crazy thing is actually how little chatter there is and was about these rather dramatic price swings. Certainly the broad market rally is big news, as is the rather dramatic financial bailout, but at some point some specialists should be asking about this rally.