Author Topic: Ask Packer - No Seriously, Ask Him Anything (AHA)!  (Read 295383 times)

Packer16

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Re: Ask Packer - No Seriously, Ask Him Anything (AHA)!
« Reply #70 on: November 23, 2013, 10:29:28 AM »
You can read 10-Ks of major players (Comcast, Cablevision, Time Warner and Charter) and look at investor presentations.  There is no tutorial I am aware of.  Liberty Global will probably provide a good flavor because it has both delivery and some content assets.  I haven't been following Liberty as I have found cheaper smaller players (like General Communications).

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augustabound

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Re: Ask Packer - No Seriously, Ask Him Anything (AHA)!
« Reply #71 on: November 23, 2013, 10:43:09 AM »
Judging by the description below your avatar, you're a part of Rider Nation for tomorrow's game?  ;D

"Serenity now, insanity later." - Lloyd Braun

Packer16

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Re: Ask Packer - No Seriously, Ask Him Anything (AHA)!
« Reply #72 on: November 23, 2013, 10:52:36 AM »
Yes I am.  I will be listening because our TV provider does not have the stations covering it down here.  I wish a major broadcaster would at least carry the Grey Cup.  Are you a part of Rider nation?  I also could not find a downloadable Rider icon like I could do for the Packers.  Should be a good and cold game this year.  The Super Bowl will also be cold this year being in the Meadowlands.

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racemize

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Re: Ask Packer - No Seriously, Ask Him Anything (AHA)!
« Reply #73 on: November 23, 2013, 10:58:18 AM »
I have a general question about EBIT and EBITDA multiples--how does one think about them?

For example, I presume that EBIT/EV should be comparable to pre-tax P/E, yes?  e.g., if you are willing to pay 10x pre-tax earnings with no debt, then you are also willing to pay 10x EBIT/EV?

Using EBITDA seems troublesome to me, e.g., what if they are extremely capital expensive?  I guess you can only use it for comparing companies within the same industry?  Would it make sense to create an owner earnings version, e.g., EBITDA - maintenance cap-ex / EV?

Generally, what is the advantage for EBIT/EBITDA use over say FCF or owner earnings?  What are common multiples for these metrics (e.g., as compared to P/E where < 10 is cheap, 13-15 is often "fair", >20 needs growth, etc.)

Not sure if I should post this elsewhere, but it seems like you use these multiples often, and I've never gotten a good handle on them.

Thanks!

Packer16

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Re: Ask Packer - No Seriously, Ask Him Anything (AHA)!
« Reply #74 on: November 23, 2013, 11:19:51 AM »
In theory EV/EBITDA becomes useful in cases where there are large amounts of investment that will be used over long periods of time and maintenance cap ex is much smaller than the initial investment.   Commercial real estate, cable and telecom are examples.  You can calculated the EBITDA - maintenance cap ex which is defined by some to be FCF.  I typically calculate the EBITDA and enterprise FCF (FCF plus interest expense) multiples for use with EV. 

The advantage over FCF is sometimes these firms are investing for future growth and current FCF is low.  General Communications is an example.  FCF is low due to investment and maintenance cap ex is small compared to initial outlay.  So to compare the value of General to other firms EBITDA is an appropriate metric.  If you want a standalone valuation, you can do a DCF where in the terminal value the future is all cap-ex is maintenance.  However, you don't need to that to see that it is cheap, you can just compare to other cable cos and use the market multiple to imply a reasonable price.  The other issue with the DCF is the large number of assumptions and the supportability of these assumptions and the amount of time to do all this versus the result.

The multiples used to determine cheapness is based upon the comps.  You can look cross sectionally at the current and historically and the current take out multiples of acquisitions.  So for cable cos the current multiples are in the 7 to 8 range with take-out multiples in the 8 to 10 range.

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augustabound

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Re: Ask Packer - No Seriously, Ask Him Anything (AHA)!
« Reply #75 on: November 23, 2013, 11:39:27 AM »
Yes I am.  I will be listening because our TV provider does not have the stations covering it down here.  I wish a major broadcaster would at least carry the Grey Cup.  Are you a part of Rider nation?

No, born and raised in Hamilton, moved to Toronto in my late 20s, now in Newmarket and have little interest in the CFL. I love NCAA more than NFL and CFL.

I remember growing up in Hamilton and all the fans seemed to be seniors.  It most definitely seemed to be a game from a generation ago. Nobody talked about it or followed it at school.
Now all those guys from high school seem to be season ticket holders.  ;D

Here's a link for all those in Green Bay who thinks that it's cold there.
http://www.cbc.ca/news/canada/saskatchewan/grey-cup-fans-camp-out-in-freezing-regina-parking-lot-1.2437790
-29C translates to -21F.
 
« Last Edit: November 23, 2013, 11:43:36 AM by augustabound »
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Packer16

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Re: Ask Packer - No Seriously, Ask Him Anything (AHA)!
« Reply #76 on: November 23, 2013, 07:04:30 PM »
That is cold.  Some real loyal fans.  I wonder what the coldest Grey Cup game was?  At temperatures that cold the ground has to be like concrete and the ball like a brick.

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augustabound

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Re: Ask Packer - No Seriously, Ask Him Anything (AHA)!
« Reply #77 on: November 24, 2013, 01:04:12 AM »
That is cold.  Some real loyal fans.  I wonder what the coldest Grey Cup game was?  At temperatures that cold the ground has to be like concrete and the ball like a brick.

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From the weather network, 1975: This was the coldest recorded Grey Cup in history. The clash between Edmonton and Montreal in Calgary featured a wind chill that felt like -30C
"Serenity now, insanity later." - Lloyd Braun

racemize

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Re: Ask Packer - No Seriously, Ask Him Anything (AHA)!
« Reply #78 on: November 24, 2013, 10:32:56 AM »
Packer, since you are looking at the telecom/cable co area a lot, do you have any comment on this and how it affects your longer term thinking on the companies?

http://www.businessinsider.com/cord-cutters-and-the-death-of-tv-2013-11

Packer16

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Re: Ask Packer - No Seriously, Ask Him Anything (AHA)!
« Reply #79 on: November 24, 2013, 11:00:54 AM »
I think the article is a little misleading because most folks are going from cable to high speed internet and the number of sub losses as a % of total subs is relatively small.  When they total all losses, they only include "cable cos" in their numbers not cable cos plus telcos like they should.  I think the data shows the market is mature but I think most already know that.

The only real threat they mention is wifi hot spots.  So unless you think paying cable subscribers are going to transition to mobile devices and watch TV/internet at Starbucks, there is not much of a threat.  Mobile is strarting from such a small base that it does not make sense to compare growth rates.

As Malone has stated the key is the wide pipe.  If entertainment starts to use more bandwidth you will see growth in broadband providers both telco and cable and Starbucks wifi hot spot just won't suffice.

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« Last Edit: November 24, 2013, 11:16:23 AM by Packer16 »