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Liberty Family - What To Own??


ValueMaven
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With at least 10 different stocks and tracking stocks in the whole Liberty Family, which one is your favorite and why? 

 

Qurate Retail (QRTEA), Liberty Broadband (LBRDK), GCI Libery (GLIBA), Liberty TripAdvisors (LTRPA), Liberty Expedia Holdings (LEXEA), Liberty Global (LBTYK), Liberty Latin America (LILAK) Liberty SiriusXM (LSXMK), Liberty Formula 1 (FWONK), Liberty Braves (BATRK),

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With at least 10 different stocks and tracking stocks in the whole Liberty Family, which one is your favorite and why? 

 

Qurate Retail (QRTEA), Liberty Broadband (LBRDK), GCI Libery (GLIBA), Liberty TripAdvisors (LTRPA), Liberty Expedia Holdings (LEXEA), Liberty Global (LBTYK), Liberty Latin America (LILAK) Liberty SiriusXM (LSXMK), Liberty Formula 1 (FWONK), Liberty Braves (BATRK),

 

My biggest position is in GLIBA which I've had since having a sizable position in GNCMA. Added a 5-6% position in LBRDA when CHTR's stock price collapsed 15-16% after earnings release last year. I'd say LBRDA would be probably the best, mainly because discounted CHTR stock with a takeout at NAV probable at some point. GCI has had issues with contracts not being paid and the Alaskan economy being in a recession. Add in the LendingTree position I'm not really keen on. Has at least the double discount going for it but ultimately will depend if they can get CHTR/LBRDA to take it at NAV or if there is a discount.

 

Sirius is attractive with the giant discount to NAV but not sure how recession-proof the business is and not sure the end game of adding Pandora and iHeart.

 

F1 and the Braves are also interesting but F1 is reliant on Concorde agreement satisfying all parties while making it more competitive beyond the current oligopoly. Braves has the real estate going for it but ultimately is contingent on someone wanting to pay up for a trophy asset of a declining sport. Nevermind the TV contract doesn't expire until 2027. My guess is the end game is similar to when the Dodgers were sold, with the new TV deal being a key part of the deal.

 

 

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As a percent of my portfolio ~

 

- Liberty Broadband

- Formula 1

- Liberty Global

- Discovery Communications

- Expedia

 

And I've decided to divest Discovery and Expedia completely over the next little while, but not sure how yet, probably replace it with Airbnb or Google depending on market prices at the time. Discovery I'm re-distributing into Formula 1 and any new Malone deal announced if it looks good. There is a decent probability Discovery gets bought out after the merger 'house cleaning'.

 

 

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Since 2015, the Liberty complex has been a major component of my AUM.

 

Currently:

 

Liberty SiriusXM ~12% position (sold a bunch last year in the 40s)

GCI Liberty ~8% position

Discovery ~ 4% position (sold a bunch last year. My cost basis is ~18/share so was buying it very cheap)

 

I owned Liberty Braves at a cost basis around 14-15ish (including warrants). Bought more at ~20ish. Sold out in the high 20s. I'd probably re-buy (at current intrinsic value) if it went back to around 20ish as it's probably worth at least 30.

 

Also used to own Formula 1 but sold out last year as well. Had owned it pre-tracker.

 

 

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  • 1 year later...

How it Liberty Formula 1 not down more? The 2020 Summer Olympics were just postponed. What does that say about the likelihood of any Formula 1 races taking place this summer? It wouldn't surprise me if the entire season ends up being canceled. At the very least it will be severely truncated. Plus, this thing is quite leveraged.

 

Check out the race schedule:

 

https://www.formula1.com/en/racing/2020.html

 

Management said today it still expects 15 - 18 races this season. I seriously doubt that happens unless they stretch this season well in to next year.

 

https://www.formula1.com/en/latest/article.statement-from-f1-ceo-chase-carey-when-the-situation-improves-well-be-ready.605dLuJYFSuJlOw8E2T4F5.html

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I think f1 is similar to booking or Expedia. Both are real world leisure stocks. The market is probably discounting (ie giving the benefit of the doubt) for some very poor numbers this year. But obviously the present value of a business is not 1 year of earnings. After all it will earn money 20 years from now+. The question is how long the real world activity shutdown will be. If you dilute a 10 year earnings stream by 1 year of zero earnings and it trades at 20x earnings, the difference is only about 11 percent (say 900m a year avg vs 1 billion a year avg over 10 years)

Now I would say f1 dropped far more than 11 percent more like 66 percent. And that assumes 1 year of zero , which it may not be.

 

 

 

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  • 1 year later...

Good thread, I never understood what is the "core" holding in the spaghetti of "tracking" stocks.

 

Even a drunk sailor can safely identify Brookfield's vertebral column: BAM. No such luck with these Malone's entities.

Edited by Xerxes
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When do you guys think they will hit the 80%?

I owned the stock briefly for that very reason about 3 years ago and sold when they bought Pandora because it brought their percentage ownership down right when they were about the cross the threshold.

I'm conflicted because I love the special situation aspect but I have no faith whatsoever in the underlying op co, so I'm trying to be in and out of this quickly around the time of the event.

Edited by WayWardCloud
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17 minutes ago, WayWardCloud said:

When do you guys think they will hit the 80%?

I owned the stock briefly for that very reason about 3 years ago and sold when they bought Pandora because it brought their percentage ownership down right when they were about the cross the threshold.

I'm conflicted because I love the special situation aspect but I have no faith whatsoever in the underlying op co, so I'm trying to be in and out of this quickly around the time of the event.

 

+1

 

Long term sustainability of the underlying business is a huge concern for me. The Stitcher acquisition (Podcasts) is a bust in addition to Pandora. I really worry that Sirius will be an also ran in audio with no real advantage in any segment (music, podcasts, live etc.) in the long run. However it does generate significant cashflow today so it will be interesting to see what Malone & Maffei do with it. It eerily reminds me of Qurate. 

 

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33 minutes ago, Munger_Disciple said:

 

+1

 

Long term sustainability of the underlying business is a huge concern for me. The Stitcher acquisition (Podcasts) is a bust in addition to Pandora. I really worry that Sirius will be an also ran in audio with no real advantage in any segment (music, podcasts, live etc.) in the long run. However it does generate significant cashflow today so it will be interesting to see what Malone & Maffei do with it. It eerily reminds me of Qurate. 

 

I agree. You are also paying through the nose for a business with an obsolence risk. What is the FCF yield - maybe 5%?

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wow - couldn't disagree more.  Look at the margins.  Look at results during and through the covid quarters.  Look at the subscriber base.  Look at how they are reducing the share-count.  Malone and Maffei have recently called SIRI a 'great business'.  You need to understand the benefits of talk radio, and the value SIRI offers vs.  the cost.  I think more than the P transaction, was the LiveNation deal they did...which is now up a lot - but the market isnt given them credit for it at all.  Next few quarters will be interesting.

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17 minutes ago, Spekulatius said:

I agree. You are also paying through the nose for a business with an obsolence risk. What is the FCF yield - maybe 5%?

It has been awhile since I looked at LSXMA closely. 5% FCF for SIRI sounds about right. It is clearly not super cheap. I am not sure what is SIRI's terminal value in 5-10 year time frame. Also (LSXMA's stake  in) Live Nation is trading at a significant over-valuation IMO. So while the discount to NAV is attractive, I worry that NAV is overstated. 

Edited by Munger_Disciple
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Posted (edited)

Bet against Malone at your own discretion.  Several catalysts here - one of which is the 80% threshold which they will hit in either 4Q21, or 1Q22 - in which case Liberty can start aggressively buying back shares - with zero tax leak (same tax filing).  Also SIRI current guidance is likely conservative - but that might be priced in already.  Capital allocation (buybacks at parent or holdco), and tax status will be key here.  Will be interesting to follow this regardless.  

Edited by ValueMaven
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I don't think anyone here has said they were actively betting against Malone (shorting LSXMA). We're simply unsure about the long term value of the one-way satellite technology that's the infrastructure behind SiriusXM, see a lot of competition with deep pockets attacking the content side, and have witnessed Malone and Maffei incinerate money buying back Qurate shares over the years.

 

Ps: almost 40% of my portfolio is invested in companies related to John Malone so don't get me wrong I'm a big fan as well 🙂

Edited by WayWardCloud
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17 hours ago, WayWardCloud said:

I don't think anyone here has said they were actively betting against Malone (shorting LSXMA). We're simply unsure about the long term value of the one-way satellite technology that's the infrastructure behind SiriusXM, see a lot of competition with deep pockets attacking the content side, and have witnessed Malone and Maffei incinerate money buying back Qurate shares over the years.

 

+1

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  • 4 weeks later...
Posted (edited)

SIRI surprised the market and is buying back another $2B of stock.  This will take Liberty’s owernship over 80% over the next quarter or two.  At which point the cable cowboy will literally merger the LSXMK into SIRI or use SIRI’s tax free cash flow to buyback stock aggressively.  It’s fairly obvious to me the NAV spread will collapse over the next 12M’s IMHO

Edited by ValueMaven
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Very solid beat across the board by SIRI.  Ahead of expectations of paid sub growth.  FCF higher then expected, and buybacks slightly lower then expected.  This is still a 4Q21/1Q22 story for LSXMK.  Liberty will likely cross 80% ownership sometime in late 3Q/early 4Q at this rate.  NAV discount is around ~38% 

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Based on some words by Maffei I think those investors hoping for the discount to close quickly may need more patience.  I don't think that 80% will necessarily close the discount or even dent it.  My preference is for it to take at least a couple more years as long as Siri continues to grow at least modestly.  This will produce a fantastic result and give more time to the liberty team to take advantage of that discount.

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Agree with MV, Siri is a solid business, it has some pricing power, it has content that others cannot replicate, and it owns the dashboard real estate for a long time.  Penetration of Siri radios into new cars is still growing and churn is still falling.  Those are pretty strong indicators that the business is resilient, people have been talking about the competition for many years and although I see potential headwinds farther down the road I see quite a few tailwinds over the next 5 plus years.  In a few more years there will be 200 million Siri radios in cars on the road and they will attack the used car opportunity aggressively.  They have also started rolling out their new platform which will give them all the data on their customers listening habits, they have been almost blind up until recently in that regard.  And Malone is quietly gaining control of the music ecosystem which could possibly be very very interesting further down the road.  But the real kicker is you are able to buy Siri at a 35% discount to net asset value or roughly 12 times economic earnings.  So the free cash flow yield is quite a bit higher than it looks.  If Liberty can get their hands on a large cash flow and buy back lots of stock at this discount, it's going to be a safe and highly probable home run. Just my 2 cents

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Isnt the catalyst here that once Liberty owns 80% of SIRI - it can take SIRI's cash-flow (tax free) and use it to aggressively buyback the tracker at a massive discount??  Also - it is possible that Liberty simply merges both the tracker and SIRI together in early 2022. 

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  • 2 weeks later...

Liberty Media's ownership of Sirius now stands at 78.1% as of July 23rd.  Management bought back 3.2M shares of LSXMA/K during the quarter at an average price of $44.27.  This is a really interesting mixture of SIRI aggressively buyback back stock and the tracker buying back its own stock at a ~30% NAV discount.  Next few quarters should be interesting.

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