buylowersellhigh Posted July 10, 2013 Share Posted July 10, 2013 Anybody buy some LBTYA? Any interest here? There is no Liberty Global (LBTYA) message board that I could find, so I thought I would post this here. This is an excerpt about Liberty Global from Dan Loeb's latest letter "During the First Quarter, we increased our exposure to LBTYA, Europe's largest cable operator, following the announcement of its acquisition of VMED. The acquisition triggered a wave of investments by arbitrageurs, who created an attractive entry point for us by putting pressure on LBTYA shares. Initiating a position in VMED allowed us to purchase LBTYA at a material discount to its pre-announcment pro forma trading levels. Our initial interest in LBTYA was spurred by multiple catalysts and favorable geo tailwinds. Relative to the US cable market,Europe offers materially higher volume growth, lower churn, and meaningful penetration opportunity. Before yearend, we expect catalysts in the stock to include the closeing of the VMED deal, the initiation of a substantial buyback plan, and the unveiling of accretive wireless and B2B initiatives. The wireless mkt in LBYTA's key West Europe markets generates over $73 bill of annual rev, presenting LBTYA with the opportunity to redifine the MVNO market, leveraging a unique WiFi footprint, full back office and system control, and attractive quad play bundles. LBTY also appears poised to ramp up its B2B efforts, particularly in Germany. We believe Liberty’s strategic value as the primary alternative to the incumbent telecom operator’s fixed infrastructure in its markets is overlooked. The growth of mobile broadband will put pressure on carrier spectrum allocations, enhancing the importance of WiFi offload and wireline backhaul infrastructure. In a mobile broadband world, having a strong ground game is more important than ever for wireless operators and European cable players are well‐positioned with dense, upgraded fiber infrastructure offering considerable headroom. In our analysis, pro forma Liberty Global could generate more than $6 per share of free cash flow in fiscal 2014 when factoring in the considerable buyback plan announced along with the acquisition. Through VMED, we had the opportunity to create Liberty Global at slightly more than 10x FY2014 free cash flow per share, giving us the cheapest free cash flow multiple in European cable in a deal that will be free cash flow accretive and meaningfully de‐leveraging to Liberty. Despite the move in the shares following the VMED announcement, Liberty Global’s relative value remains attractive, especially given the recent appreciation of its European cable peers and the interim appreciation of slower growth, mature cable operators in the United States. We believe the shares could trade toward 15x pro forma 2014 free cash flow per share and compound at ~20% per year following the closing. Link to comment Share on other sites More sharing options...
Guest wellmont Posted July 10, 2013 Share Posted July 10, 2013 his cost basis is probably no higher than the mid $60s. :( when he writes about a stock so favorably that he already has his position in, he is "lining up" folks he plans to sell to down the road. :) Link to comment Share on other sites More sharing options...
Liberty Posted July 14, 2013 Share Posted July 14, 2013 I don't think the SIRI thread has been linked from here, so here we go: http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/siri-sirius-xm-radio/ I find the Charter stuff very intriguing, and I've been taking another look at LMCA recently. Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted July 14, 2013 Author Share Posted July 14, 2013 http://www.businessinsider.com/barnes-and-noble-ceo-resigns-2013-7 http://finance.yahoo.com/blogs/breakout/board-room-thriller-barnes-noble-killing-nook-save-135630059.html Barnes and Noble's CEO has resigned. It looks like the Nook will eventually die and that BKS will be valued based on its bricks and mortar operations. Both Malone and BKS' founder have been interested in taking over the company in the past. BKS' founder only wanted to buy the physical stores. Malone probably was interested in buying the whole thing, and hiring a better CEO. Now that the Nook is probably in trouble and therefore not worth much, I don't think that he will be interested in taking over the company at a high price. Link to comment Share on other sites More sharing options...
buylowersellhigh Posted July 14, 2013 Share Posted July 14, 2013 Don't you think that $17 is a good "floor" for BKS based on Malone's investment? Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted July 15, 2013 Author Share Posted July 15, 2013 Not really. If the Nook takes off, then the Nook portion of Barnes is worth a lot... possibly several times today's price, if not more. If the Nook doesn't take off, then that portion of Barnes isn't worth that much. Remember that not everything that Malone has done worked out. When it comes to technology, there will be a lot of successes and a few home runs. The Nook will probably be a dud. Link to comment Share on other sites More sharing options...
Yours Truly Posted July 15, 2013 Share Posted July 15, 2013 Remember that not everything that Malone has done worked out. When it comes to technology, there will be a lot of successes and a few home runs. The Nook will probably be a dud. Got any examples of "not everything that Malone has done worked out."? Link to comment Share on other sites More sharing options...
merkhet Posted July 15, 2013 Share Posted July 15, 2013 Remember that not everything that Malone has done worked out. When it comes to technology, there will be a lot of successes and a few home runs. The Nook will probably be a dud. Got any examples of "not everything that Malone has done worked out."? I recall that he made a lot of investments during the dotcom bubble that didn't work out. I believe it was through an entity called Liberty Digital that soared and then crashed and burned. Link to comment Share on other sites More sharing options...
SI Posted July 15, 2013 Share Posted July 15, 2013 John Malone got margin called in the crisis sending Liberty Interactive down under $3. Link to comment Share on other sites More sharing options...
orion Posted July 16, 2013 Share Posted July 16, 2013 Not really new but just found this interview with John Malone on Youtube. For those of you who have liked the book "Cable Cowboys" you will like this video too. Link to comment Share on other sites More sharing options...
Guest wellmont Posted July 16, 2013 Share Posted July 16, 2013 Malone sold lcapa in the crisis. not linta. linta went down because it had too much leverage going into the crisis, and it was a retailer. And the thinking was there was another great depression in store. linta was fine, as long as credit markets opened up within a couple years. And malone had lots of levers to pull before that equity was toast. but nobody wanted to hold any leveraged equity at that time, especially a tracking stock focused on the consumer's discretionary spending. lcapa was probably, in hindsight, the one stock to bet the farm on coming out of the crisis. I did not. :( All the trackers got insanely cheap because, well they were trackers, they were complicated, they were levered, and they paid no dividends. You could actually buy DTV extremely cheaply through liberty at the time. Since DTV proper was very cheap in it's own right, you got a double whammy buying it through lmdia. There was also an excellent arb opportunity. Link to comment Share on other sites More sharing options...
Liberty Posted July 16, 2013 Share Posted July 16, 2013 Not really new but just found this interview with John Malone on Youtube. For those of you who have liked the book "Cable Cowboys" you will like this video too. Thank you, I haven't seen that one. Will watch it later tonight :) Link to comment Share on other sites More sharing options...
Liberty Posted July 16, 2013 Share Posted July 16, 2013 I'm trying to find another video interview with John Malone that was posted somewhere on this forum a few months ago. If I remember correctly, it was in some kind of academic context (he was speaking in some school?)... Anyone remembers that one and has the link? Thanks. Link to comment Share on other sites More sharing options...
enoch01 Posted July 16, 2013 Share Posted July 16, 2013 I'm trying to find another video interview with John Malone that was posted somewhere on this forum a few months ago. If I remember correctly, it was in some kind of academic context (he was speaking in some school?)... Anyone remembers that one and has the link? Thanks. Maybe you were thinking of the Mavericks Lecture at University of Denver? Link to comment Share on other sites More sharing options...
Liberty Posted July 16, 2013 Share Posted July 16, 2013 I'm trying to find another video interview with John Malone that was posted somewhere on this forum a few months ago. If I remember correctly, it was in some kind of academic context (he was speaking in some school?)... Anyone remembers that one and has the link? Thanks. Maybe you were thinking of the Mavericks Lecture at University of Denver? Thank you, that's the one. You're quick. I had actually found it and came back here to post the link, but you beat me to it. Many thanks. I also found these two in my archives, in case anyone is interested: http://www.forbes.com/forbes/1999/1018/6410126s1.html http://www.multichannel.com/distribution/unleashing-liberty-malone-muses-global-cable-content-us-economy/139975 Link to comment Share on other sites More sharing options...
enoch01 Posted July 16, 2013 Share Posted July 16, 2013 I'm trying to find another video interview with John Malone that was posted somewhere on this forum a few months ago. If I remember correctly, it was in some kind of academic context (he was speaking in some school?)... Anyone remembers that one and has the link? Thanks. Maybe you were thinking of the Mavericks Lecture at University of Denver? Thank you, that's the one. You're quick. I had actually found it and came back here to post the link, but you beat me to it. Many thanks. I also found these two in my archives, in case anyone is interested: http://www.forbes.com/forbes/1999/1018/6410126s1.html http://www.multichannel.com/distribution/unleashing-liberty-malone-muses-global-cable-content-us-economy/139975 You're welcome, and thanks for posting the others! Link to comment Share on other sites More sharing options...
giofranchi Posted July 19, 2013 Share Posted July 19, 2013 3:37 AM Charter Communications (CHTR) is reportedly working with Goldman Sachs to acquire Time Warner Cable (TWC) in a move that's part of an attempt by John Malone, whose Liberty Media (LMCA) owns 27% in Charter, to rebuild his U.S. cable empire. Buying TWC, which rebuffed Malone's maneuvering earlier this year, would be a stretch for Charter, due to its high debt and its market cap of$12.6B vs TWC's $33.14B. Notwithstanding, TWC shares jumped 8% in AH trading. giofranchi Link to comment Share on other sites More sharing options...
bmichaud Posted July 19, 2013 Share Posted July 19, 2013 This is not a stretch at all for CHTR. An all stock offer at $175 per TWC share would be deleveraging to CHTR and give Malone multiple turns of debt capacity to fund more acquisitions and buybacks. Per Gabelli's historical commentary and the TWC/CVC fro geographical overlap, I think ultimately you get a CHTR/TWC/CVC combo, which would be virtually the same size as Comcast and have strong margin expansion opportunity. Link to comment Share on other sites More sharing options...
valueorama Posted July 19, 2013 Share Posted July 19, 2013 3:37 AM Charter Communications (CHTR) is reportedly working with Goldman Sachs to acquire Time Warner Cable (TWC) in a move that's part of an attempt by John Malone, whose Liberty Media (LMCA) owns 27% in Charter, to rebuild his U.S. cable empire. Buying TWC, which rebuffed Malone's maneuvering earlier this year, would be a stretch for Charter, due to its high debt and its market cap of$12.6B vs TWC's $33.14B. Notwithstanding, TWC shares jumped 8% in AH trading. giofranchi I think what matters is not How levered Charter is, but how levered the combined entity will be. For eg, Malone mentioned Nov 2012, that he was looking to increase leverage at liberty global. I was looking for a bond issuance like DTV. But Liberty Global bought Virgin Media(highly levered). The result is that the combined entity is more levered than original Liberty Global. :) Link to comment Share on other sites More sharing options...
Liberty Posted July 19, 2013 Share Posted July 19, 2013 Question for people who know about this kind of things: "Malone’s company agreed not to up its stake in Charter beyond 35% until January 2016 and after that must stay below 39.99%." So if Charter starts to acquire other companies for stock, Liberty's position in Charter will go down as a percentage... Are the 35-39.99% caps readjusted downward to account for the dilution, or can Malone suddenly start buying more from the new diluted lower base? Link to comment Share on other sites More sharing options...
bmichaud Posted July 19, 2013 Share Posted July 19, 2013 I've read reports about liberty media participating in order to avoid the dilution problem - so yes I believe CHTR can boost the stake in the event of dilution. I imagine whatever deal is conjured up here is going to be rather complex and it will take the market awhile to actually get it. Just what we need :) Link to comment Share on other sites More sharing options...
Liberty Posted July 20, 2013 Share Posted July 20, 2013 http://www.denverpost.com/breakingnews/ci_23694015/exclusive-john-malone-bets-broadband-return-u-s Via Indy on the general board. Link to comment Share on other sites More sharing options...
Liberty Posted July 20, 2013 Share Posted July 20, 2013 I've read reports about liberty media participating in order to avoid the dilution problem - so yes I believe CHTR can boost the stake in the event of dilution. That would be a good way to deploy more capital. If CHTR merges with TWC and others and becomes a behemoth worth 40+ billion or whatever, Malone's 35% cap becomes a lot less constrictive... Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted July 20, 2013 Author Share Posted July 20, 2013 Malone will almost certainly want Tom Rutledge to run the combined company. So this might end up being a merger where Charter kind of takes over TWC. I'm guessing that such a combination would require the approval of both companies' shareholders. So it's unlikely that the transaction will be "rather complex". (That's my prediction anyways.) Both management teams will tout the synergies of such a merger. In the cable business, there will be lots of synergies due to the greater scale giving better negotiation power. Because Charter has historically been a poorly-operated cable company, Malone will probably want TWC to give a lot of credit for Charter's potential. Link to comment Share on other sites More sharing options...
bmichaud Posted July 21, 2013 Share Posted July 21, 2013 By complex I mean three or more parties involved, stock and cash offer, buyback or special dividend announced, NOLs, perhaps a simultaneous buyout of Cablevision. Malone loves complexity, so don't see why he'd make this simple :) Link to comment Share on other sites More sharing options...
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