Comments

  • hm..really an intriguing stock. So far I have only looked at the numbers and I am still torn by them.
    The numbers look all close to perfect. A growth stock, but not priced expensively. Amazing margins, no problems with current obligations. And even very capital-light - they produce an enormous amount of free cash flow.
    So far so perfect.

    And then they carry $14 intangibles and over $14 billion debt on their balance-sheet. (Okey, the $14 billion debt are partially offset by $7 billion cash right now. But this debt they took on for an acquisition, so it won't last on the balance sheet).

    Next I would would have to check their business and especially acquisitions more closely. But the balance sheet is just a big big reg flag. So I am afraid I will have to pass on this.

    Thanks

    Christoph
  • edited December 2017
    ...about debt level...

    First debt ratio/level should be looked at with difference eyes depending on the stability of the cash flow of the company in consideration ...

    Second about the debt and the acquisition (as John Malone explained in the interview) they are paying long term debt at less then 4% for a 12% FCF yield acquision after synergies (...ok synergies in generally is a crap concept but in the case of John Malone and his track record I trust him)...

    You have to consider who is John Malone (btw the book "The outsider" has a chapter on him)...he is playing with debt, leverage, taxes, mergers, acquisitions for decades in this sector with a killing track record in terms of TSR (total shareholders returns)....

    Some people associate debt=bad thing...well a stable cash flow not in leverage in a rational way with debt (especially if cheap) is really a bad thing for shareholder...
  • edited December 2017
    From "The Outsiders"...about Malone: "...From his debut in 1973 until 1998 when the company was sold to AT&T, the compound return to TCI's shareholders was a phenomenal 30.3%, compared with 20.4% for other publicly traded cable companies and 14.3% for the S&P 500 over the same period."


    Not saying it is surefire...nothing is...just saying if you ever hear the number one in one sector with the best track record in that sector coming up talking about something "dirty cheap" and putting then the money when his mouth is...just send me a PM pls :)
  • Thanks for this pick. i looked into them a couple of months ago and was extremely undervalued took a large position. Still feel its undervalued.
  • Yeah, Malone has always scared me with the debt and the sort of promoter tendencies, like the "tracking stocks." I know he has done well but I could argue that just levering up a somewhat stable bidness is going to create return dispersions and you are either going to have home runs or strikeouts and it is going to be largely down to luck. I was turned off a little by their post merger promo video on the IR site.
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