LMCA - Liberty Media

[Liberty]

http://www.reuters.com/article/2014/04/03/libertymedia-barnesnoble-idUSL4N0MV3AV20140403

 

* Liberty Media cuts stake to 1.6 percent from 16.6 percent

 

* Liberty Media CEO Greg Maffei to leave Barnes & Noble board

 

The divestment comes after a rally that lifted Barnes & Noble's shares 48 percent in 2014 through Wednesday as its core retail business has shown surprising robustness and it has scaled back the money-losing Nook e-reader business. [...]

 

Liberty is selling 90 percent of its Barnes & Noble stake, obtained in 2011 after investing $204 million in the largest U.S. bookstore chain, lured by its then-promising Nook devices.

 

Liberty's preferred stock was convertible into about 12 million shares, or about 16.6 percent of shares, and offered a dividend rate of 7.75 percent annually to be paid out quarterly.

 

The money is definitely better used somewhere else IMO, either in a new thing or just buying more Charter or doing LMCA buybacks...

[racemize]

http://www.reuters.com/article/2014/04/03/libertymedia-barnesnoble-idUSL4N0MV3AV20140403

 

* Liberty Media cuts stake to 1.6 percent from 16.6 percent

 

* Liberty Media CEO Greg Maffei to leave Barnes & Noble board

 

The divestment comes after a rally that lifted Barnes & Noble's shares 48 percent in 2014 through Wednesday as its core retail business has shown surprising robustness and it has scaled back the money-losing Nook e-reader business. [...]

 

Liberty is selling 90 percent of its Barnes & Noble stake, obtained in 2011 after investing $204 million in the largest U.S. bookstore chain, lured by its then-promising Nook devices.

 

Liberty's preferred stock was convertible into about 12 million shares, or about 16.6 percent of shares, and offered a dividend rate of 7.75 percent annually to be paid out quarterly.

 

nice.  I was hoping they would do this.

[loganc]

nice.  I was hoping they would do this.

 

+1

 

For example, I would prefer using that capital to repurchase LMC shares.

[no_free_lunch]

Regarding the upcoming rights offering, does anyone have any experience with these?  I understand the general concept but I am just wondering what is involved as far as actually subscribing and how difficult/easy that is from an online broker.

[Guest wellmont]

Regarding the upcoming rights offering, does anyone have any experience with these?  I understand the general concept but I am just wondering what is involved as far as actually subscribing and how difficult/easy that is from an online broker.

 

Here's my experience at tda. other brokers may do it differently. you will see the rights in your account a few days after they are issued. don't worry if you don't see them right away. once they are in your account call up your broker and ask for the "reorg" department. Tell them you would like to "exercise all Liberty rights". Then tell them (if you intend to) that you wish to oversubscribe for the maximum number of shares you are allowed. they should tell you this number.

 

Here's the thing. You have to have the cash in your account (or margin) for 100% of the potential amount you are on the hook for with your request (basic + oversubscription). this amount will be deducted from your account for the duration of the offering period until your shares are purchased. To the extent you don't get the maximum shares that you requested via oversubscription (and you won't), you will get that money returned to you. It makes sense to do all this during the last week or two of the offering period. Because they are taking cash from your account and you won't have use of it. Good luck. Your broker will walk you through this.

[no_free_lunch]

Thanks Wellmont.

[cogitator99]

Thanks, that was helpful wellmont

[thefatbaboon]

can anyone remember that blog where there was a post setting out the shares/value of all malone's personal holdings?

[Liberty]

can anyone remember that blog where there was a post setting out the shares/value of all malone's personal holdings?

 

Not sure if this is what you mean, but there's some info here:

 

http://glennchan.wordpress.com/2013/04/26/tracking-john-malone-part-1/

 

http://glennchan.wordpress.com/2013/04/26/tracking-john-malone-part-2/

 

http://glennchan.wordpress.com/2013/04/28/tracking-john-malone-part-3-liberty-media-lmca/

 

http://glennchan.wordpress.com/2014/03/15/libertymalone-update/

[thefatbaboon]

that was it, thanks

[ItsAValueTrap]

Looks like the share repurchases will resume now that LMCA is trading at $126.

[giofranchi]

Looks like the share repurchases will resume now that LMCA is trading at $126.

 

I have just bought some! ;)

 

Gio

[Yours Truly]

Looks like the share repurchases will resume now that LMCA is trading at $126.

 

I hope so!

 

During one of Maffei's latest appearances, he stated that LMCA was trading at a 10-15% discount to NAV and at that time the stock was trading between $125-130.

[ItsAValueTrap]

So comparing Liberty now to Liberty a year ago:

 

- LMCA share price about the same.

- SIRI share price about the same

- CHTR up, LYV up, BNS up

- BNS liquidated

- Sold convertible debt

- Bought back shares on the open market at around the current price

- Did a major buyback from swapping some business+cash for LMCA shares with Comcast.

- Has been paying down its margin loan

- Sold SIRI shares to SIRI.  Effectively, SIRI is paying cash to LMCA and buying back shares from everybody else.

 

The underlying businesses have grown from generating cash flow and paying down their debt.  SIRI continues to grow its free cash flow at a crazy rate.  The underlying assets are more valuable.

 

In terms of buying back shares, LMCA is limited by liquidity and taxes.  Because LMCA doesn't really have any businesses that generate cash flow, it more or less has to sell its assets to raise cash.  Or it has to find creative ways to finance its repurchases, like the proposed rights offering.

If it sells assets, it will trigger capital gains on the sale.  So it has to find ways to creatively defer taxes.

 

I think they may try to sell off some of their Live Nation stake via derivatives.  Live Nation is a mature business and won't grow like CHTR and SIRI.

[Liberty]

I think they may try to sell off some of their Live Nation stake via derivatives.  Live Nation is a mature business and won't grow like CHTR and SIRI.

 

It seemed to have pretty decent growth potential to me, especially internationally. This presentation gives an overview of some of the recent numbers, and while it's not hyper-growth, it doesn't look too mature to me:

 

http://investors.livenationentertainment.com/files/doc_events/2013/LYV_Liberty%20Media%20Investor%20Day%202013.pdf

[giofranchi]

I am buying more LMCA as the market opens: right now it is the most undervalued company among the ones I am interested to invest in. :)

 

Gio

 

[Liberty]

Update: here's the original story that I previously referenced (might as well go to the source):

 

http://www.ft.com/cms/s/0/0b3f0ef0-c719-11e3-929f-00144feabdc0.html#axzz2zY5YbrGu

 

Comcast and Time Warner Cable have entered negotiations to hive off cable assets worth up to $20bn in a deal with Charter Communications that aims to allay Washington’s concerns about their proposed merger.

Comcast and TWC have held talks with Charter about a deal involving between 3m and 5m subscribers during recent days, according to people familiar with the matter.

 

The options include the straight sale of subscribers and a scenario where Comcast and TWC spin off subscriptions into a new company and sell Charter a substantial minority stake. A combination of the two is also under consideration.

 

The discussions are at an early stage and no deal is certain, the people cautioned.

[DCG]

I've looked at LMCA at several times in the past, but always have a bit of a hard time understanding it (at least in terms of where to expect future growth to come from). They have investments in a pretty wide range of areas, but it doesn't seem like they generate enough free cash flow to fuel investments, other than selling existing investments.

 

 

What are your valuations of the company, and what do you base future earnings on? Or is it more of a bet on John Malone?

[giofranchi]

I've looked at LMCA at several times in the past, but always have a bit of a hard time understanding it (at least in terms of where to expect future growth to come from). They have investments in a pretty wide range of areas, but it doesn't seem like they generate enough free cash flow to fuel investments, other than selling existing investments.

 

 

What are your valuations of the company, and what do you base future earnings on? Or is it more of a bet on John Malone?

 

I think about LMCA this way:

An hedge fund run by one of the shrewdest capital allocators out there, who is 10 years younger than Mr. Buffett (and therefore might still be at the top of his game for many years to come), and who has mastered probably better than anyone else the art of stock repurchases and the art of spin-offs engineering, both sources of value creation no hedge funds I know of can claim to possess nor benefit from. On top of that shareholders see a cost structure that is far less expensive than the 2% + 20% formula adopted by most hedge funds.

Despite the fact LMCA has compounded capital at 15% since 2004, it is trading at a discount to its NAV.

Of course, anything can happen, but it is very difficult to see how this could turn out to be a poor investment! ;)

 

Gio

 

[Liberty]

Despite the fact LMCA has compounded capital at 15% since 2004, it is trading at a discount to its NAV.

 

Are you looking at the spinoffs too? IIRC, from 2006 to mid 2013, the return from LMCA + its spinoffs is around 33% year.

[giofranchi]

Are you looking at the spinoffs too? IIRC, from 2006 to mid 2013, the return from LMCA + its spinoffs is around 33% year.

 

I had in mind the slide in attachment. :)

 

Half 2012 and the whole 2013 are not included.

 

Gio

[Liberty]

Update: here's the original story that I previously referenced (might as well go to the source):

 

http://www.ft.com/cms/s/0/0b3f0ef0-c719-11e3-929f-00144feabdc0.html#axzz2zY5YbrGu

 

Comcast and Time Warner Cable have entered negotiations to hive off cable assets worth up to $20bn in a deal with Charter Communications that aims to allay Washington’s concerns about their proposed merger.

Comcast and TWC have held talks with Charter about a deal involving between 3m and 5m subscribers during recent days, according to people familiar with the matter.

 

The options include the straight sale of subscribers and a scenario where Comcast and TWC spin off subscriptions into a new company and sell Charter a substantial minority stake. A combination of the two is also under consideration.

 

The discussions are at an early stage and no deal is certain, the people cautioned.

 

More details about a possible deal are emerging:

 

http://www.bloomberg.com/news/2014-04-22/charter-said-to-near-deal-with-comcast-for-1-5-million-customers.html

[loganc]

Weitz Fund LMCA "Analyst Corner" Report:

 

https://weitzinvestments.com/literature_and_forms/shareholder_letters/view/id_430/default.fs

[Guest wellmont]

the mainstream media has no idea that comcast and charter are carving up the cable industry into a duopoly. they will realize this (too late) once COX merges with charter. (after chtr secures the comcast/twc customers).

[ni-co]

the mainstream media has no idea that comcast and charter are carving up the cable industry into a duopoly. they will realize this (too late) once COX merges with charter. (after chtr secures the comcast/twc customers).

 

The mainstream media also has no clue that this is really about squeezing suppliers, not (necessarily) customers. Their goal is to build a monopsony (or a "duopsony" if you like).