Liberty

One thing to consider with pushing Verizon to get more aggressive is that past a certain point, you're shooting yourself in the foot. If you get them to pay a ton but they mostly do it in stock, you end up holding a crapload of stock that just overpaid for an asset so probably isn't going to get a great return on it. Would you rather own stock in the patsie that overpaid, or just keep your pure-play cable asset that is about to turn the corner on integration and gush FCF after years of hard work? You can always sell later if you really need to, but Malone made the mistake once of getting stuck with a ton of stock in the company that acquired him without him having control (when AT&T bought TCI at the top for a crazy price and then the stock tanked while Malone couldn't sell) and I think he'll think twice about it the next time.

FWIW - Why would Malone clearly say he doesn't agree with "Tom's way of building a business". And later in the interview, he ties the buyback to the "one cookie now versus two cookies later" delayed gratification experiment making it sound like he thinks the buyback program is too early and should've been delayed. I'd love to ask him what he meant there, because clearly his traditional way of building a business is pretty similar to what CHTR is doing. The levered free-cash-flow playbook was basically perfected by Malone at TCI and he's been supporting it at other companies he controls. So I'm curious what's the difference. I don't really see it. They were never much above their target level because of the way the deal was structured, and the fact that Rutledge could do such a huge buyback while staying within range shows that they didn't have too much debt but rather that they were falling below their target 4-4.5x otherwise (which is around where Malone has traditionally liked it). As for Charter having balance sheet capacity to be flexible, I think they can pretty easily do almost any deal they want considering what is available. It's not like there's a huge cable company for sale right now or they could merge with comcast, so whatever comes will be much smaller deals that they could easily do (probably the alaska assets someday that Malone also controls through Gliba?). Maybe there could be a deal with some content, but that doesn't seem to be the plan right now, and the small "free radicals" are probably in difficult positions if they don't merge with huge players to get scale (and CHTR wouldn't give them that on the content side), and the big players are too big for CHTR to swallow anyway.

I doubt Malone was in favor of debt reduction at CHTR except maybe temporarily because he thought the stock might have gotten ahead of itself on the M&A rumors. Malone tends to prefer higher leverage on cable assets than Rutledge, from what I've understood of the situation. Seemed to me like it was more about the execution of the buyback rather than the magnitude and leverage.

I'm not following closely at all (I'm interested in electric cars as a technology, but not in this co as an investment or short), but didn't they mention something about building and shipping Model 3s to Europe and Asia? Isn't this just showing that production is going there right now to meet that backlog (and presumably the US backlog has been fully or partly eliminated in recent months)? The stock certainly didn't react to the number, so something's telling me this isn't what it looks like at first glance, but ¯\_(ツ)_/¯ Yes of course, but orders from Europe are around 18-20k right now if i recall that correctly, and it will start as soon the end of february. It just shows that there is no continuous demand. Why shouldn`t europe demand fall off after the first batch of orders are fullfilled either? So maybe they can sell 100k cars per year going forward, but thats it. Thats a far cry from the 300-400k production capacity. And the stock is priced as if they sell 2 million cars profitably per year already. Not to mention that its very unlikely now that they post a profit in Q1 or revenue growth QoQ. And the negative working capital rolling off can hurt them hard on the cash balance. I don't know. I'm just saying the chart is showing a huge drop because it doesn't take into account what's going on outside the US. If you had the same chart for "worldwide", it would probably look pretty normal. I also think the general theory is that over time they keep making lower-priced versions of the M3 and sell it to different segments of the market, and then open up a new segment with the Y (smaller electric crossover), and eventually with an electric pickup truck, etc. It'll be hard, and they're usually late on their promises, but I don't think the worldwide market for EVs has suddenly tapped out in a single month.

I did watch it all, but that was a while ago and a lot of water has passed under the bridge since, so obviously it's not fresh in memory. You might be right, but it's also possible that he was ambiguous and we just interpreted it differently based on our own context and understanding of the situation. Or maybe I'm wrong ¯\_(ツ)_/¯

They probably can't be too picky in the region, as it's more important to build scale in a fragmented patchwork of small markets. The US is different, they already have lots of scale and great assets, and have launched a mobile offering through MVNO.

I'm not following closely at all (I'm interested in electric cars as a technology, but not in this co as an investment or short), but didn't they mention something about building and shipping Model 3s to Europe and Asia? Isn't this just showing that production is going there right now to meet that backlog (and presumably the US backlog has been fully or partly eliminated in recent months)? The stock certainly didn't react to the number, so something's telling me this isn't what it looks like at first glance, but ¯\_(ツ)_/¯

They seem pretty confident vs 5G. Either that they can compete directly, or that if a telco wants to, they have to buy an existing backhaul like CHTR's, as it would just be too expensive and long to build it all from scratch.

That was my understanding of the situation too. The offers weren't good enough, probably because they included a discount for the uncertainty of whether the asset could actually be shown to perform as well as they've been saying it could (on top of being in currency that they didn't want, in the case of Masa). So they thought the value would be higher if they actually ate that uncertainty themselves and brought it across the finish line on the integration to reduce that uncertainty and then either get a better price from a third party, or just keep operating it.

New acquisition: https://www.businesswire.com/news/home/20190201005305/en/HEICO-Corporation-Subsidiary-Acquires-Solid-Sealing-Technology Acquired 85% of it for all-cash. Price undisclosed. h/t @jerrycap

Q4: http://www.ropertech.com/sites/default/files/Roper%20Q4%202018%20Earnings%20Presentation%20FINAL.pdf

DISH hasn't exactly been doing great lately, though.

Q4: https://press.aboutamazon.com/news-releases/news-release-details/amazoncom-announces-fourth-quarter-sales-20-724-billion

Scott Alexander review of Zero to One: https://slatestarcodex.com/2019/01/31/book-review-zero-to-one/

Maybe my memory's failing me, but what is the source of Rutledge not even wanting to entertain any offers? I seem to remember Malone making a comment about people coming to him for M&A, and he had to decide if it was serious enough to bring to the board (implying maybe he didn't on some offer(s)?), but I don't remember that part about Rutledge being somehow closed to the idea.

Posted some highlights form the call here:

I watched the interview again, and I got the impression Malone has quite some criticism on Rutledge. cfr. min 43:00 where he makes the story about the 2 cookies and concludes : spending all your cash on supporting your stock is eating that cookie. Anyone agrees with this, or did I misinterpret what I heard? You're right. The issue is about using CHTR capital to shrink the enterprise value, but drive up the stock price, instead of reinvesting to compete against Verizon and Google and ATT and Netflix etc by retaining the capital. Tom is pretty exasperated with the Time Warner cable acquisition. Probably is a lot of work and he didn't want to be involved in another merger or sale while all those talks were flowing (Verizon, Softbank overtures etc). In effect its easier for Malone (and us as investors) to tell Charter to integrate with a telco, but it basically means more stuff for Rutledge to deal with on top of still righting the ship with TWC. "eating the cookie, is taking up the stock price today with cash by shrinking the denominator..."delaying gratification is investing for future growth - playing defense against Verizon and others".. that's my interpretation of the whole thing. Tom effectively drove the board to not pursue another transaction when the overtures came. you are spot on with this interpretation imo Based on the interviews with Malone, and possibly some with Winfrey or Zinterhofer (?, can't remember), it seems to me like the M&A overtures were all flawed in many ways. Softbank wanted to pay in Sprint shares at a valuation that wasn't that great, and Verizon's number probably wasn't high enough. I doubt that Rutledge would just kill a favorable deal because he doesn't want to bother with another integration; he could just take the money and let someone else be CEO. I think he really thought that he would do better by being patient and finishing the integration and letting FCF go up when all is done.

Q4: https://ir.charter.com/static-files/22f5a04e-9060-4d9a-8a35-0c428474e74a Slides: https://ir.charter.com/static-files/62657171-fd98-4a31-9899-110e69c1020c

https://www.cnbc.com/2015/03/26/apples-tim-cook-will-give-away-all-his-money.html Not sure what value this link adds: 1) I already let Cook off the hook here, for the more substantive reason that I remember him taking a hit on his incentive comp voluntarily once. 2) A dude with no natural heirs, and substantially below-average prospects for producing any, telling me he plans on giving away his wealth when he dies isn't exactly blowing my mind. We sort of assume that is going to happen, don't we? I don't think you took it the way I intended it. I wasn't playing some "gotcha" or whatever. You mentioned something about Cook getting rich and it reminded me of this, so I pointed it out in case you or others were unaware. Nothing more. If you already knew about it, no harm, just keep going.

Looking at its burn-rate, Alderon better make something happen.. In 2013 it had: $95m in cash, $14m in liabilities, and $192m in common equity. In sept 2018 it had: $7m in cash, $26m in liabilities, and $26m in common equity.

Q4 letter: http://ir.tesla.com/static-files/0b913415-467d-4c0d-be4c-9225c2cb0ae0

https://www.cnbc.com/2015/03/26/apples-tim-cook-will-give-away-all-his-money.html

Q4: https://s1.q4cdn.com/050606653/files/doc_financials/2019/q1/Visa-Inc.-Q1-2019-Financial-Results-Presentation.pdf

You can't separate it if you're doing a thought-experiment of a runoff/bankruptcy, but if you're thinking of it as an ongoing operating business, I think you can think of them that way.

https://seekingalpha.com/article/4236331-market-value-jd-coms-non-consolidated-equity-stakes-reveals-extreme-mispricing