Author Topic: CHTR - Charter Communications  (Read 160745 times)

BG2008

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Re: CHTR - Charter Communications
« Reply #190 on: March 28, 2018, 07:35:48 PM »
Care to disclose further allocations and the logic behind it? Thanks.


vince

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Re: CHTR - Charter Communications
« Reply #191 on: March 29, 2018, 07:37:48 AM »
when you ask about further allocations, you mean to other companies? and logic behind the heavy concentration?

vince

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Re: CHTR - Charter Communications
« Reply #192 on: March 29, 2018, 08:19:15 AM »
allison transmission, trading at 5.5 billion.  average fcf over last 4-5 years is 500 million, should be between 550-600 million this year.  so we are starting with a 10 percent yield and that 10 percent is free to distribute, not needed to grow along with nominal gdp.  my experience shows that when you start with a 10 percent yield (or will reach it within a couple years with a high probability, like chtr), in a reasonably good business with sustainable earning power you are going to do well.  obviously if u start with a 10% yield and the business earnings grow with gdp u have a 15% return (10% yield plus 5-6% nominal growth) with no multiple expansion. (this assumes mgmt doesnt like burning our retained earnings on dumb allocations and is potentially conservative cause at these multiples, if mgmt buys back lots of stock we will actually be getting more than a dollar of market value for every dollar retained and therefore a bump to that initial 10% yield).  and u are starting at the low end of price to earnings multiples so much better chance you will get multiple expansion, which means an excellent return.  for this to work, the business must have low-negative working capital needs (payables and accrued expenses greater than sum of inventory and receivables) and maintenance capex (call the company) equal to or less than depreciation. (or else the 5-6 percent growth will consume some of the 10 percent starting yield).  back to allison... they have a 60% worldwide share of teir endmarkets in fully automatic transmissions for med-large sized trucks (think fire trucks, refuse, school buses, motorhomes). penetration in north america is 80%, in China and other large emerging economies its 5%. they check the box on the 10% fcf yield.  doesnt look like an outlier cause its been 5 years of that same level of fcf.  will continue this in another post cause we have to still  assess their likelihood of 5-6 percent nominal growth and im out of space

vince

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Re: CHTR - Charter Communications
« Reply #193 on: March 29, 2018, 09:15:41 AM »
my apologies, forgot i was on chtr board.  i will copy and paste the alsn writeup and finish it under allisons board for those who want to see it

Jurgis

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Re: CHTR - Charter Communications
« Reply #194 on: March 29, 2018, 10:15:52 AM »
when you ask about further allocations, you mean to other companies? and logic behind the heavy concentration?

BG2008 might be asking in what percentages do you split your position between CHTR/LBRDA/GLIBA.
"Before you can be rich, you must be poor." - Nef Anyo

vince

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Re: CHTR - Charter Communications
« Reply #195 on: March 29, 2018, 10:27:39 AM »
Hi Jurgis,

Its a little complicated because of timing.  at first it was mostly lbrda because of the shares i was given in spinoff from liberty and the rights to buy more at 20 percent discount.  acquired about a third of chtr exposure thru lbrda at 45 bucks.  then bought about a third directly in chtr at 190, i wanted to own some directly just in case.  more recently, the last third, been buying lvnta (gliba) cause i want more chtr but i want it at cheapest price possible.  in addition i have bought and sold some lbrda profitably and also some long dated conservatively striked chtr calls.

Vince

vince

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Re: CHTR - Charter Communications
« Reply #196 on: March 29, 2018, 05:12:28 PM »
Jurgis and BG2008,

what do u guys think about chtr, the cable industry and my valuation?

Jurgis

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Re: CHTR - Charter Communications
« Reply #197 on: March 30, 2018, 07:02:15 AM »
I hold LBRDA and GLIBA shares. I don't really have much to say about valuation.
"Before you can be rich, you must be poor." - Nef Anyo

walkie518

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Re: CHTR - Charter Communications
« Reply #198 on: March 30, 2018, 07:31:05 AM »
Jurgis and BG2008,

what do u guys think about chtr, the cable industry and my valuation?

Charter is evolving.  Adding mobile is no small feat.

Charter's MVNO w/Verizon should prove fruitful, but we also find that on the 20% of Charter's new customers' mobile usage (according to the company 80% is over wifi/Charter's own pipes today), is beholden to Verizon's network. 

I bet Verizon squeezes if Charter is successful?

Does Charter build, buy, or lease towers to overcome reliance on its MVNO?  Does Charter make a bid for Sprint?  Does a bid for Sprint ruin its relationship w/Verizon? 

Studies have shown that quad-plays at scale can reduce costs by 40%.  It's more likely that Comcast sees this 40% before Charter and Charter should be able to learn a lot from Comcast's new offerings.  Charter should be better as a result?

It might be that customers don't sign up for quad-plays without significant financial incentives?  How close does the price for a charter phone need to be to charter's cost to get this done the right way?  Does Charter need to take a loss on mobile and video to gain scale?

Charter is about building value.  Maybe I'm wrong and I should be thinking about how Charter can reinvest to build a better tomorrow for shareholders? 

vince

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Re: CHTR - Charter Communications
« Reply #199 on: March 30, 2018, 09:48:41 AM »
Hey Walkie,

lots of good points on wireless but not a material part of my valuation.  Dont really know how verizon squeezes them, they have a mvno agreement.  my understanding is our mvno usage based costs will be minimal because most of bits on wifi anyway.  in addition, it is not going to be a material profit source when viewed as a sole business,  but will lower churn (which would be material).  in my mind, if it is successful, it will drive consolidation on terms favaorable to cable.  but i have to admit i havent spent lots of time on the wireless opportunity.  if it disappeared tomorrow it wouldnt change my valuation