Author Topic: CHTR - Charter Communications  (Read 341707 times)

vince

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Re: CHTR - Charter Communications
« Reply #1160 on: January 12, 2020, 05:48:55 AM »
Well the 4th qtr is always a strong one.  Interesting comment from the CFO on last call when he said the 4th would be strong but to also note that it would be a tough comparison to 4th qtr of 2018.  So it could mean that the qtr comes in strong even when comparing to last year.  In addition a Comcast executive made it very clear on the 3rd qtr call that the 4th was coming in strong.  I have also been patiently waiting for Charter to have the ebitda growth that has been a little hard to see....I calculated that if they hadn't repriced their commercial footprint lower, commercial revenues would be climbing 10%, consistent with unit growth (rather than 10% unit and 4% revs) and that would add around 1-1.5% ebitda growth (the unit and rev growth numbers i just used jump around a bit from qtr to qtr but on an annual basis we are making 300 million ebitda less than we should be).  We also have the mobile costs and the tail end of acquisition integration expense.  When I normalize for these things (not making adjustments for pricing, leaving it at 1% even though we eventually will get more robust prices) I get high single digit ebitda growth.  And now that I think about it, we have some pretty aggressive pricing that kicks in very early in the 4th and this could be something making the quarter look especially good...we'll see.


rtvinvest

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Re: CHTR - Charter Communications
« Reply #1161 on: January 14, 2020, 12:54:17 AM »
Charter bought back roughly 3 million shares in December and roughly 7 million shares in the quarter, both numbers are highs for the year and at the highest prices by far. That's an amount that probably/possibly tells us their confidence is increasing.  That doesn't necessarily mean the quarter will be sensational but I think it means they think that business fundamentals are improving.

Where are you getting these numbers from? When looking at the A/N filings it seems to me that Q3 was bigger in terms of number of shares and total $ amount (due to the large September purchase)

vince

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Re: CHTR - Charter Communications
« Reply #1162 on: February 01, 2020, 06:46:02 PM »
Charter bought back roughly 3 million shares in December and roughly 7 million shares in the quarter, both numbers are highs for the year and at the highest prices by far. That's an amount that probably/possibly tells us their confidence is increasing.  That doesn't necessarily mean the quarter will be sensational but I think it means they think that business fundamentals are improving.

Where are you getting these numbers from? When looking at the A/N filings it seems to me that Q3 was bigger in terms of number of shares and total $ amount (due to the large September purchase)

Been away on vacation for a while, I will have to go back in and take a look.  You may be right about the third qtr being stronger than the 4th, however, the 4th was strong in terms of shares purchased and when you look at the prices paid, definitely a strong statement

BG2008

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Re: CHTR - Charter Communications
« Reply #1163 on: February 03, 2020, 08:19:13 PM »
Since 2016, Charter bought back $27.4bn worth of stock at an average price of $345.  At today's stock price of $532/share, this is a 54% value creation or $14.85bn of value that was created mostly with leveraging up the balance sheet to 4.5x to buy the shares. 

Organic growth, good acquisition, good execution, and financial engineering has made this into a 18 bagger in the past decade.  Just wow.  I wish I read cable cowboys way earlier in my investing career. 

Spekulatius

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Re: CHTR - Charter Communications
« Reply #1164 on: February 04, 2020, 04:07:58 AM »
Since 2016, Charter bought back $27.4bn worth of stock at an average price of $345.  At today's stock price of $532/share, this is a 54% value creation or $14.85bn of value that was created mostly with leveraging up the balance sheet to 4.5x to buy the shares. 

Organic growth, good acquisition, good execution, and financial engineering has made this into a 18 bagger in the past decade.  Just wow.  I wish I read cable cowboys way earlier in my investing career.

When organic growth isnít present, nothing else matters generally. It is the one factor that rules them all, imo.
Life is too short for cheap beer and wine.

BG2008

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Re: CHTR - Charter Communications
« Reply #1165 on: February 04, 2020, 10:10:17 AM »
Since 2016, Charter bought back $27.4bn worth of stock at an average price of $345.  At today's stock price of $532/share, this is a 54% value creation or $14.85bn of value that was created mostly with leveraging up the balance sheet to 4.5x to buy the shares. 

Organic growth, good acquisition, good execution, and financial engineering has made this into a 18 bagger in the past decade.  Just wow.  I wish I read cable cowboys way earlier in my investing career.

When organic growth isnít present, nothing else matters generally. It is the one factor that rules them all, imo.

I am starting to really appreciate that.  I think that's why people who bought NYC rental apartments made a killing.  Rent increases coupled with leverage.  Sure, you can buy a 8% cap in the middle of no where, but you'll still collect that 8% in 10-15 years and your apartment is now older and less competitive.   

glorysk87

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Re: CHTR - Charter Communications
« Reply #1166 on: February 04, 2020, 11:02:32 AM »

I am starting to really appreciate that.  I think that's why people who bought NYC rental apartments made a killing.  Rent increases coupled with leverage.  Sure, you can buy a 8% cap in the middle of no where, but you'll still collect that 8% in 10-15 years and your apartment is now older and less competitive.

That's only true if you don't reinvest that 8% cash yield. If you do, results can be outstanding

That was basically Sam Zell's entire strategy early in his career. Buy real estate in off-the-beaten-path cities where he could get a mid-teens cash-on-cash yield (vs. primary cities where one could only get a ~4% yield), and reinvest every cent that his properties generated.

BG2008

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Re: CHTR - Charter Communications
« Reply #1167 on: February 04, 2020, 11:26:28 AM »

I am starting to really appreciate that.  I think that's why people who bought NYC rental apartments made a killing.  Rent increases coupled with leverage.  Sure, you can buy a 8% cap in the middle of no where, but you'll still collect that 8% in 10-15 years and your apartment is now older and less competitive.

That's only true if you don't reinvest that 8% cash yield. If you do, results can be outstanding

That was basically Sam Zell's entire strategy early in his career. Buy real estate in off-the-beaten-path cities where he could get a mid-teens cash-on-cash yield (vs. primary cities where one could only get a ~4% yield), and reinvest every cent that his properties generated.

Obviously big difference when you are arbitraging 15 vs 4.  8 vs 4.5 is a little different and I would actually take the 4.5 in most instances.  Rent increases doesn't cost cap ex.  When you have 30 year fixed mortgages at 3%, it becomes a very different game. But you need to get that 2-3% annual rent increase assessment right. 

EricSchleien

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Re: CHTR - Charter Communications
« Reply #1168 on: February 04, 2020, 01:17:26 PM »

I am starting to really appreciate that.  I think that's why people who bought NYC rental apartments made a killing.  Rent increases coupled with leverage.  Sure, you can buy a 8% cap in the middle of no where, but you'll still collect that 8% in 10-15 years and your apartment is now older and less competitive.

That's only true if you don't reinvest that 8% cash yield. If you do, results can be outstanding

That was basically Sam Zell's entire strategy early in his career. Buy real estate in off-the-beaten-path cities where he could get a mid-teens cash-on-cash yield (vs. primary cities where one could only get a ~4% yield), and reinvest every cent that his properties generated.

Yeah - that makes a lot of sense. Just purchased a 9.6% cap property, nothing wrong with it, beautiful interior (just redone), easy to fill with high quality tenants, and putting down 25%. With 0 growth in property value, it comes out to around 20% annualized (net).

CookingByTheNumbers

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Re: CHTR - Charter Communications
« Reply #1169 on: February 04, 2020, 06:35:39 PM »
Iíve got FY20 FCF at ~$37/share (~40% y/y increase and a FCF yield of ~ 7%). At 18x (Which isnít unreasonable, CABO trades ~ 25x and justifiably so), thatís a base case of $678/share (28% upside from here).

I truly believe when capital intensity declines - currently at 15% - to 14% (thats $6.7b in savings flowing straight to bottom line), a warranted multiple like 20x FCF is justifiable given how more efficient Charter will be at turning EBITDA to FCF as overall margins improve and cap intensity declines. Bull case of 20x FY20 FCF is $753/share or 42% upside.

Iíd like to argue my numbers are pretty conservative. Letís also consider Charterís broadband footprint is still approximately 44% underpenetrated. Ample room for growth without any incremental price increases. Just imagine when they begin implementing price increases on broadband segment?