loganc Posted May 19, 2015 Share Posted May 19, 2015 I hate to interrupt the scintillating conversation about executive comp, but the slides from the SIRI annual meeting can be found below: http://investor.siriusxm.com/common/download/sec.cfm?companyid=SIRI&fid=930413-15-2537&cik=908937 Not much new here - the FCF machine continues. I guess the one thing to note is the current 72MM car installed base with guide to 140MM cars by 2022. They may have mentioned this on a previous call, but I don't recall. Link to comment Share on other sites More sharing options...
Jurgis Posted May 19, 2015 Share Posted May 19, 2015 I think Liberty was referring to the relationship between supply and demand... Actually, as I explained above, the supply and demand model does not quite work, because there is a barrier: it is hard to replace one person with another one. If CEOs were fungible, their salaries would drop, since supply is likely higher than assumed. Link to comment Share on other sites More sharing options...
Sportgamma Posted May 19, 2015 Share Posted May 19, 2015 I think you actually made an argument for the law of supply and demand... Link to comment Share on other sites More sharing options...
thefatbaboon Posted May 19, 2015 Share Posted May 19, 2015 Comrade Baboon, I will ignore your ad hominem attacks for now assuming they were meant as jokes. In the future, please either clarify via smileys or don't engage in such behavior. I think all you guys who criticize well earned salaries are crazy! Why should all the benefit redound to the provider of capital? Actually, you are completely right. Except that for some reason you think that Maffei is the only one who deserves outlandish salary. Let's then talk about all the other employees of TCI who really built "the cable industry for peanuts" so that their boss could enjoy racehorses. Are you saying that Malone was the only one who worked on it? Are you saying that he should have gotten even more millions while everyone else in the company probably did not even earn 100K per year? If Malone is so sensitive, perhaps he should pay higher salaries for everyone in his companies, which of course will lower return for shareholders. I am fine with that. Are you? So I could throw you ad hominem adjectives back at you for saying that only the provider of capital and CEO need to get outrageous compensations. But I won't. :) And, no, I disagree that Malone, Maffei, Dimon, Mullaly, etc. are single handedly responsible for their companies doing great. And therefore the salary ratio between them and other employees should be much lower than it is even if the company is very successful. Take care I nowhere said Maffei was the only one deserving of a good salary or that anyone is singlehandedly responsible for anything. Indeed, within all of the Liberty entities (their investees/subs) there are other well paid officers. George, Rutledge, Meyer, Rapino...plus I'm sure CFOs, content and ops guys. Regarding the secretaries and cable installers...well that is a market that is fungible...usually they have options, they would go to whoever paid significantly better. If they don't leave it's probably a good sign that their skills are not more valuable elsewhere. Regarding guys like Buffett, Malone etc if they are so numerous and fungible where the hell are they all hiding??!! Indeed I would say the absolute opposite holds: the supply and demand works just fine here but that they are so scarce and valuable that Capital will overpay the mere appearance of a similarity to a master CEO, because the risk of missing out on a Buffett completely outweighs the risk of overpaying 50 pretenders. Personally I don't think there is an "ought" involved here. So your comment is irrelevant. I don't think only capital and ceos "ought" get "outrageous" salaries. The word outrageous is silly in this context. And the "ought" with it's implications of moral right and wrong and Lenin deciding on what remuneration is required for the appropriate life. This is free market capitalism. Maffei asks for what he can get, Malone pays what he wants. I don't sit in judgement of big capitalists who have "too much" capital simply because they have what you consider an "outrageous" amount. What do you recommend we do with all the billionaires? Maybe we should confiscate anything over $25m. I don't sit in judgement of big earners who earn "too much" or "outrageous" salaries. What do you suggest? Shall we pay them all a flat fee? $2.5m pa? What about some of the good investors on this board...shall we cap their returns? Anything over double the S&P gets reattributed to the under performers? This argument is so silly it is all I can do to stop myself descending into ad hominem attacks. These are some of the greatest businessmen of the last 50 years you are criticizing. Personally I am very grateful for the work they have done for me (as a shareholder) and I don't think paying less than 1% of the prospective gain in equity capital is a lot for people who double my capital in 5 years. This is an investing board. People here like investing and making money. Why come here to spout this nonsense? There must be other boards where people can discuss salary caps, socially motivated taxes on capital, and what the proletariat need and deserve. Link to comment Share on other sites More sharing options...
Jurgis Posted May 19, 2015 Share Posted May 19, 2015 The people here have raised issues with renumeration in numerous boards, so clearly not everyone believes that this is "nonsense" and should be off topic. Also to repeat: I have not advocated anywhere for enforcing any salary limits via regulation or other approaches. I have advocated exercising your rights as shareholders to vote against excessive renumeration and I plan to continue to do so. I would also encourage CEOs and other highly paid individuals to exercise temperance in allocating monetary rewards. Peace I am totally fine if this is moved to General board. Link to comment Share on other sites More sharing options...
magno111 Posted May 27, 2015 Share Posted May 27, 2015 is this a real threat ?? http://www.reuters.com/article/2015/05/27/us-siriusxm-turtles-idUSKBN0OC2IZ20150527 Link to comment Share on other sites More sharing options...
Liberty Posted May 29, 2015 Share Posted May 29, 2015 We had an interesting discussion about LMCA and SIRI yesterday on Twitter. You should be able to follow it chronologically here just by scrolling down: Link to comment Share on other sites More sharing options...
sriraja Posted June 12, 2015 Share Posted June 12, 2015 Liberty Media, LINTA, Liberty Trip Advisor, Liberty Broadband - Annual Shareholder meeting audio - You can listen to Malone's current thinking in the Q&A - http://edge.media-server.com/m/p/68ptb99z Link to comment Share on other sites More sharing options...
folivera13 Posted June 25, 2015 Share Posted June 25, 2015 Bluegrass Capital and others had good points on LMCA here: I did some calculations to see when LMCA could reach 80% ownership of SIRI based on SIRI's share repurchases. I assumed an average repurchase price of $4.40. This could be conservative- especially if SIRI shares continue to trade at these levels. I showed two scenarios 1) years it takes for LMCA to reach 80% ownership if SIRI only uses FCF (based on 2015 only, so no growth assumption here) and 2) years it takes based on last year's share repurchases (which may be conservative or aggressive depending on your point of view). Any additional thoughts or comments?LMCA-SIRI_80%_math.pdf Link to comment Share on other sites More sharing options...
merkhet Posted June 25, 2015 Share Posted June 25, 2015 Bluegrass Capital and others had good points on LMCA here: I did some calculations to see when LMCA could reach 80% ownership of SIRI based on SIRI's share repurchases. I assumed an average repurchase price of $4.40. This could be conservative- especially if SIRI shares continue to trade at these levels. I showed two scenarios 1) years it takes for LMCA to reach 80% ownership if SIRI only uses FCF (based on 2015 only, so no growth assumption here) and 2) years it takes based on last year's share repurchases (which may be conservative or aggressive depending on your point of view). Any additional thoughts or comments? You should probably be looking at a combination of FCF + additional borrowings given that Sirius XM targets a 4x EBITDA ratio for its debt. Link to comment Share on other sites More sharing options...
folivera13 Posted June 25, 2015 Share Posted June 25, 2015 Agreed- the exercise was meant to be indicative. With those simple assumptions one could easily see LMCA reaching 80% ownership in under 3 years. At 4x leverage using 2015 EBITDA (I know you are financed on LTM numbers, but for indicative purposes 2015 might work since they are not being aggressive in reaching their target leverage) SIRI could raise nearly $1.3bn of capital. If you add cash on the b/s that number grows to $1.7bn of capital. On top of that if you add FCF over the next 12 months of $1.4bn you have $3.1bn of available capital for share repurchases. This would equate to ~44% of the capital needed to repurchase enough shares to grow LMCA's ownership to 80%. This could theoretically happen over the next 12 months. Note the 44% calc is reached by assuming an average repurchase price per share of $4.40. As an LMCA shareholder I want SIRI's share price to remain low. Link to comment Share on other sites More sharing options...
Liberty Posted June 25, 2015 Share Posted June 25, 2015 Don't forget that as EBITDA grows the debt capacity grows, even at a constant 4x. And if Liberty wanted to speed things up and SIRI share price was still reasonable, they could make leverage spike up temporarily (to 4.5x, say) just to push above 80% more quickly and then delever. Link to comment Share on other sites More sharing options...
merkhet Posted June 25, 2015 Share Posted June 25, 2015 Don't forget that as EBITDA grows the debt capacity even at a constant 4x grows. And if Liberty wanted to speed things up and SIRI share price was still reasonable, they could make leverage spike up temporarily (to 4.5x, say) just to push above 80% more quickly and then delever. Yup, my guess is that they wait for Sirius XM to buy itself back into the fold of Liberty Media. However, if they see something they want to do with Sirius XM, they'd bump up the debt amount a little and then use the company as a platform to roll up something else as a de-levering mechanism a la Charter. Link to comment Share on other sites More sharing options...
loganc Posted July 8, 2015 Share Posted July 8, 2015 This is kind of a funny idea, but I will go with it anyway. Given that Chase Carey is going to be something of a free agent after (as I understand it) the executive transition at FOX, why wouldn't Malone want to hire Carey to run SIRI? Link to comment Share on other sites More sharing options...
folivera13 Posted July 23, 2015 Share Posted July 23, 2015 The NAV discount just continues to expand on days like today. Siri up 1% and LMCA down .5% Its a 86 cent dollar on my conservative NAV assumption. Link to comment Share on other sites More sharing options...
tombgrt Posted July 26, 2015 Share Posted July 26, 2015 Hi all, thanks for the enormously informative posts here and elsewhere. I'm late to the party (only recently read The Outsiders and started reading these topics) but LMCA seems interesting at first sight. My biggest doubt lies in SIRI's valuation. While I know FCF/share growth has been amazing and that the business is very robust, my value investing genes tell met it's too expensive at > 15xFCF. On the other hand you have Maffei (and/or Malone?) saying that SIRI was able to buy back $2.5b in stock at very attractive valuations (see the letter). What are the more experienced (growth) investors here thinking about the current valuation? What would be an estimate of fair value to you? I like the dynamic where the market knows LMCA is buying up SIRI and that Malone won't overpay in an eventual buyout. This possibly keeps the stock somewhat depressed in the next few years what in turn should drive returns higher. Also, despite the fact that LMCA got more straightforward, the NAV seems to widen? Why is that? Feels like heresy to be thinking about buying a Malone stock well into a bull market... Link to comment Share on other sites More sharing options...
Liberty Posted July 26, 2015 Share Posted July 26, 2015 I doubt that SIRI as it currently performs will ever be valued at less than 15x FCF, so if that's your upper limit, this might not be for you. Sticky subscription businesses with high margins, high operating leverage, fast growth, and great capital allocation won't be selling at a multiple lower than the SP500... Link to comment Share on other sites More sharing options...
tombgrt Posted July 26, 2015 Share Posted July 26, 2015 You're right of course Liberty. It all depends on how fast they are able to grow FCF/share from here. 25%+ for a few more years makes this a cheap stock of course. Might pick up some C class tomorrow as a starter. Also makes it easier to do the work and buy a ton more if it falls further. ;) Thanks again all. Link to comment Share on other sites More sharing options...
Liberty Posted July 26, 2015 Share Posted July 26, 2015 You're right of course Liberty. It all depends on how fast they are able to grow FCF/share from here. 25%+ for a few more years makes this a cheap stock of course. Might pick up some C class tomorrow as a starter. Also makes it easier to do the work and buy a ton more if it falls further. ;) Thanks again all. If you're buying LMCK, remember the 1bn Vivendi lawsuit. Many people forget about it ;) Link to comment Share on other sites More sharing options...
tombgrt Posted July 27, 2015 Share Posted July 27, 2015 I read about it. Is it not included in the c class? Link to comment Share on other sites More sharing options...
Liberty Posted July 27, 2015 Share Posted July 27, 2015 Yes, I just meant people tend to forget it. Link to comment Share on other sites More sharing options...
Phaceliacapital Posted July 27, 2015 Share Posted July 27, 2015 If you're buying LMCK, remember the 1bn Vivendi lawsuit. Many people forget about it ;) Was thinking the exact same thing, a lot of people (buyside/sellside) who do the sotp vivendi analysis forget to include this... Link to comment Share on other sites More sharing options...
folivera13 Posted July 27, 2015 Share Posted July 27, 2015 Remember the $1bn does not include legal fees which will take a big chunk. Also l believe Liberty Global is entitled to a portion of the $1bn based on recent comments by Malone (I believe at the AGM). Link to comment Share on other sites More sharing options...
Liberty Posted July 28, 2015 Share Posted July 28, 2015 SIRI Q2: http://investor.siriusxm.com/releasedetail.cfm?ReleaseID=924102 Wow, 1.6% churn, that's impressive. FCF/share up 25%. Link to comment Share on other sites More sharing options...
giofranchi Posted July 28, 2015 Share Posted July 28, 2015 SIRI Q2: http://investor.siriusxm.com/releasedetail.cfm?ReleaseID=924102 Wow, 1.6% churn, that's impressive. FCF/share up 25%. Good to see great progress! :) Liberty, do you feel you can predict SIRI’s future comfortably enough, or is it more a bet on Malone’s business acumen? Thank you, Gio Link to comment Share on other sites More sharing options...
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