CABO - Cable One

[rogermunibond]

Does it make sense for Cox or Mediacom to look at CABO?

[wabuffo]

Does it make sense for Cox or Mediacom to look at CABO?

I think both of these ownership groups probably are looking for exits.  Mediacom, in particular, has been for sale for years but asking price is ridiculously high.  I think ATUS needs to reduce debt - but once it does, it will be looking to roll-up more cablecos.

wabuffo

[Munger_Disciple]

https://finance.yahoo.com/news/cable-one-announces-pricing-upsized-004900676.html

Cable One selling stock at a bleeding edge multiple of 18-19 times EBITDA.

[Munger_Disciple]

I think this is a smart move by CABO. The sellers of cable properties don't want CABO's inflated stock. They prefer cash. So CABO is selling stock to "public" shareholders and will likely use the cash for acquisitions. Thus this can be viewed as CABO indirectly using its high stock price to buy other cable cos. 

[jgyetzer]

I've owned this for several years and although I dislike dilution, I think this reflects smart capital allocation.  There are small rollup opportunities still available.

[Munger_Disciple]

Dilution due to the stock offering is a good deal for long term shareholders and a bad deal for buyers of this offering. It is as if LT shareholders sold a portion of their holding at a very high price in a tax-free manner to the buyers.