Author Topic: CHTR - Charter Communications  (Read 248790 times)

KJP

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Re: CHTR - Charter Communications
« Reply #800 on: January 10, 2019, 07:43:25 AM »
Vince,

Thank you very much for your explanation.
It helped a lot to get some feeling with the numbers behind the company.
I'll have a look also on the base numbers behind the economics of the sector.

thanks!

This post, and others on that blog over the last two years, about Charter may interest you:  https://yetanothervalueblog.com/2018/08/some-updated-thoughts-on-charter-post-earnings-chtr.html



vince

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Re: CHTR - Charter Communications
« Reply #801 on: January 10, 2019, 08:35:39 AM »
I think I mentioned on here (could have been somewhere else) that I went back with all of the monthly A/N numbers and tried to match it up to how many shares were bought back in a quarter, and they don't match really at all. It just seems like they sell some shares but not in direct proportion to the buyback.

I'm not certain but I think that may be because the buying of ANH shares are not done on a perfect month ending day.  For instance, the time frame for a purchase may begin on December 15 and end on January 15th.  I also think that the purchases may be done all at once for an average price over the preceeding however many days.  But you should be able to come close and if you are a Charter shareholder you should find this monthly information very useful.

vince

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Re: CHTR - Charter Communications
« Reply #802 on: January 10, 2019, 08:50:05 AM »
Vince,

Thank you very much for your explanation.
It helped a lot to get some feeling with the numbers behind the company.
I'll have a look also on the base numbers behind the economics of the sector.

thanks!

Comcast is a great comparable to forecast Charters earning power when the acquisitions are completed but with a few caveats.  First you need to isolate CMCSA numbers from the rest of their assets...fortunately the information is transparent enough where you can do this with little extra work.  Second you will need to make some mental adjustments with the fact that CMCSA's Arpu is roughly 30$ more per month per customer relationship....this is a big difference and may be extremely important going forward.  Lastly, the nature of Charter's footprint is very different which can make an enormous difference overtime especially when you consider the potential pressure coming from 5G and other competitive positioning happening within the industry.  I find the whole excercise fascinating and you will be aided greatly by reading up on the industry's history....the book Cable Cowboy's is fantastic!!

KJP

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Re: CHTR - Charter Communications
« Reply #803 on: January 10, 2019, 08:51:44 AM »
I think I mentioned on here (could have been somewhere else) that I went back with all of the monthly A/N numbers and tried to match it up to how many shares were bought back in a quarter, and they don't match really at all. It just seems like they sell some shares but not in direct proportion to the buyback.

I'm not certain but I think that may be because the buying of ANH shares are not done on a perfect month ending day.  For instance, the time frame for a purchase may begin on December 15 and end on January 15th.  I also think that the purchases may be done all at once for an average price over the preceeding however many days.  But you should be able to come close and if you are a Charter shareholder you should find this monthly information very useful.

We know that the company is repurchasing alot of shares and has been doing so for several years.  So, what incremental value do you get from estimating monthly repurchase numbers, rather than waiting for the quarterly numbers that the company discloses? 
« Last Edit: January 10, 2019, 08:53:57 AM by KJP »

Liberty

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Re: CHTR - Charter Communications
« Reply #804 on: January 10, 2019, 09:26:42 AM »
We know that the company is repurchasing alot of shares and has been doing so for several years.  So, what incremental value do you get from estimating monthly repurchase numbers, rather than waiting for the quarterly numbers that the company discloses?

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vince

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Re: CHTR - Charter Communications
« Reply #805 on: January 11, 2019, 09:03:09 AM »
I think I mentioned on here (could have been somewhere else) that I went back with all of the monthly A/N numbers and tried to match it up to how many shares were bought back in a quarter, and they don't match really at all. It just seems like they sell some shares but not in direct proportion to the buyback.

I'm not certain but I think that may be because the buying of ANH shares are not done on a perfect month ending day.  For instance, the time frame for a purchase may begin on December 15 and end on January 15th.  I also think that the purchases may be done all at once for an average price over the preceeding however many days.  But you should be able to come close and if you are a Charter shareholder you should find this monthly information very useful.

We know that the company is repurchasing alot of shares and has been doing so for several years.  So, what incremental value do you get from estimating monthly repurchase numbers, rather than waiting for the quarterly numbers that the company discloses?

Well the most obvious benefit is the fact that you have an almost real time estimate of  their market cap that is more accurate than if you didn't, which is shrinking by a half to three quarters percent every month at a constant share price.  Not so obvious and probably more important is that you can deduce the trajectory of their ebitda growth before the market sees it if you know enough about the company (for example their target debt to ebitda ratio and their reluctance to go above 4.5 times unless there is a value creating acquisition).  Lastly, as Liberty pointed out, it's fun.....I find that the more I think about it the more ideas I get about the little advantages of information.  Most of this creative exercise will not give you precision but when combined with deep knowledge of mgmt (which I find comes from reading as many transcripts as I can find), their policies and the nature of the business, they can give you better probabilistic insight which is the name of the game imo.

« Last Edit: January 11, 2019, 09:12:04 AM by vince »

KJP

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Re: CHTR - Charter Communications
« Reply #806 on: January 11, 2019, 11:03:10 AM »
I think I mentioned on here (could have been somewhere else) that I went back with all of the monthly A/N numbers and tried to match it up to how many shares were bought back in a quarter, and they don't match really at all. It just seems like they sell some shares but not in direct proportion to the buyback.

I'm not certain but I think that may be because the buying of ANH shares are not done on a perfect month ending day.  For instance, the time frame for a purchase may begin on December 15 and end on January 15th.  I also think that the purchases may be done all at once for an average price over the preceeding however many days.  But you should be able to come close and if you are a Charter shareholder you should find this monthly information very useful.

We know that the company is repurchasing alot of shares and has been doing so for several years.  So, what incremental value do you get from estimating monthly repurchase numbers, rather than waiting for the quarterly numbers that the company discloses?

Well the most obvious benefit is the fact that you have an almost real time estimate of  their market cap that is more accurate than if you didn't, which is shrinking by a half to three quarters percent every month at a constant share price.  Not so obvious and probably more important is that you can deduce the trajectory of their ebitda growth before the market sees it if you know enough about the company (for example their target debt to ebitda ratio and their reluctance to go above 4.5 times unless there is a value creating acquisition).  Lastly, as Liberty pointed out, it's fun.....I find that the more I think about it the more ideas I get about the little advantages of information.  Most of this creative exercise will not give you precision but when combined with deep knowledge of mgmt (which I find comes from reading as many transcripts as I can find), their policies and the nature of the business, they can give you better probabilistic insight which is the name of the game imo.

Have you successfully traded around your monthly analysis?

I'm asking out of curiosity, not to hassle you or to insist that what you're doing isn't worth your time. 

vince

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Re: CHTR - Charter Communications
« Reply #807 on: January 12, 2019, 01:39:09 PM »
I think I mentioned on here (could have been somewhere else) that I went back with all of the monthly A/N numbers and tried to match it up to how many shares were bought back in a quarter, and they don't match really at all. It just seems like they sell some shares but not in direct proportion to the buyback.

I'm not certain but I think that may be because the buying of ANH shares are not done on a perfect month ending day.  For instance, the time frame for a purchase may begin on December 15 and end on January 15th.  I also think that the purchases may be done all at once for an average price over the preceeding however many days.  But you should be able to come close and if you are a Charter shareholder you should find this monthly information very useful.

We know that the company is repurchasing alot of shares and has been doing so for several years.  So, what incremental value do you get from estimating monthly repurchase numbers, rather than waiting for the quarterly numbers that the company discloses?

Well the most obvious benefit is the fact that you have an almost real time estimate of  their market cap that is more accurate than if you didn't, which is shrinking by a half to three quarters percent every month at a constant share price.  Not so obvious and probably more important is that you can deduce the trajectory of their ebitda growth before the market sees it if you know enough about the company (for example their target debt to ebitda ratio and their reluctance to go above 4.5 times unless there is a value creating acquisition).  Lastly, as Liberty pointed out, it's fun.....I find that the more I think about it the more ideas I get about the little advantages of information.  Most of this creative exercise will not give you precision but when combined with deep knowledge of mgmt (which I find comes from reading as many transcripts as I can find), their policies and the nature of the business, they can give you better probabilistic insight which is the name of the game imo.

Have you successfully traded around your monthly analysis?

I'm asking out of curiosity, not to hassle you or to insist that what you're doing isn't worth your time.

Yes but cannot say for sure the extra money made is related to the filings and in fact didn't trade the position based on the filings.   I have a large core holding (large relative to my invested assets) that I have been regularly adding to since buying it in the 160-180 rangeand about 20% of that has been sold and bought back a few times.  The sales were only made when I think I have magical powers to guess that we are at a short term peak....and to manage the size of the position down because I keep buying whenever we get down under 300.  So basically, up until now the buyback has just kept me confident in between quarters to continue buying

AJDelphi

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Re: CHTR - Charter Communications
« Reply #808 on: January 12, 2019, 02:04:23 PM »
Haven't listened to the podcast yet but seems very relevant considering 5G, Fiber, Backhaul etc.

https://www.recode.net/2019/1/10/18175869/susan-crawford-fiber-book-internet-access-comcast-verizon-google-peter-kafka-media-podcast

Foreign Tuffett

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Re: CHTR - Charter Communications
« Reply #809 on: January 29, 2019, 05:11:18 PM »
I don't have a strong opinion on CHTR, but the bull case I keep seeing both here and on Twitter seems somewhat overly simplistic. A few thoughts, in no particular order:

* I pay $45 per month for Comcast internet. I have an acquaintance who pays well over $200 per month for Comcast internet + landline phone + an extensive cable TV package ("Triple Play"). Let's take a page out of Bezos' playbook and ignore gross margin %, to focus on gross profit $. I'm skeptical that my friend's nearly $3000 annual cable bill produces only a marginally higher gross profit # for Comcast than my own $540 annual bill.

* Most new cable sign ups that I've seen are done via a 12 or 24 month initial contract. Typically, unless you call and argue with a customer service rep, prices go up significantly for the same service once these initial contracts reach the end of their term. If the rate of cable video customer churn is increasing (which it appears to be), then lots of customers are probably downgrading to internet only once their initial contracts expire. This limits the ability of the cable companies to jack up the price and enhance the unit-level profitability of that customer.

* Similarly, increased video customer churn means that the cable companies have to (in effect) amortize the cost of the initial truck roll and digital set top box over a shorter time frame. This damages the unit level economics of the business.   

* I agree with the bulls that consumer demand for broadband internet is fairly price inelastic. However, the industry has to be cautious when increasing prices due to the threat of further government regulation. There's a long history of government conflict with the cable industry, which is perhaps best epitomized by Al Gore calling John Malone "Darth Vader."

* Finally, I think predicting what the 5G vs. fiber vs. cable picture is going to look like a decade from now is very, very difficult.

My contract with Comcast referenced above recently expired. I called them, had a 10 minute conversation with an agent, and now have a new contract with identical terms (monthly price, internet speed, and term). Note that Comcast is my only option for high speed internet.

This reinforces my thinking that the popular "cable internet is a natural monopoly with massive untapped pricing power" thesis, while not outright false, is overly simplistic. Maybe Big Cable is afraid of the government turning their business into a regulated utility?