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John Malone Related Companies


Parsad
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A member asked for a separate John Malone Related Companies board, which isn't really possible without adding more boards for other companies.  So the next best thing is a separate thread solely for all of the various companies he is/was involved with.  Feel free to discuss all of them on here or stuff related to them.  Cheers!

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Why is it that it is fashionable to complain how complex Fairfax Financial is BUT it is not fashionable to complain about the complexity the John Malone' constellation fiefdoms. (i.e. don't you get it, he is the most tax-efficient investor)(i.e. you are not sophisticated enough to understand the Malone' canvas)

 

Why is it ok to complain about Fairfax Financial lack of performance in the past 5 years BUT it it not ok to complain about Liberty's fiefdoms performance in the past 5 years (which ones are we suppose to look at anyways to gauge performance, i am lost)

 

Why is it ok to complain about Brookfield treatment of minority shareholders (the dreaded BAM), BUT it it not ok to complain about Liberty's fiefdoms treatment of minority shareholders.

 

Just some high level observation, i am not a Liberty expert and hope not offending any hardcore fans here.

 

EDIT: That said, I agree that the Malone fiefdoms needs its own sub-section (aka Church of Malone) in par with Berkshire and Fairfax, but not my call

Edited by Xerxes
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9 hours ago, Xerxes said:

Why is it that it is fashionable to complain how complex Fairfax Financial is BUT it is not fashionable to complain about the complexity the John Malone' constellation fiefdoms. (i.e. don't you get it, he is the most tax-efficient investor)(i.e. you are not sophisticated enough to understand the Malone' canvas)

 

Why is it ok to complain about Fairfax Financial lack of performance in the past 5 years BUT it it not ok to complain about Liberty's fiefdoms performance in the past 5 years (which ones are we suppose to look at anyways to gauge performance, i am lost)

 

Why is it ok to complain about Brookfield treatment of minority shareholders (the dreaded BAM), BUT it it not ok to complain about Liberty's fiefdoms treatment of minority shareholders.

 

Just some high level observation, i am not a Liberty expert and hope not offending any hardcore fans here.

 

EDIT: That said, I agree that the Malone fiefdoms needs its own sub-section (aka Church of Malone) in par with Berkshire and Fairfax, but not my call

A lot of people do complain about Malone’s companies. In fact I would rather go elsewhere typically. Most of his entities have been duds - LILA, LBTYA, DISCA, QRTEA. The only one that really worked was CHTR with Sirius/ LSXMK just doing OK.
 

When his levered equity does work, it tends to works very very well.

Edited by Spekulatius
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Agree with Spek. Having come into my investing heyday over the past 15 years, I was at various point quite fascinated by the idea of John Malone. Unfortunately, the ideas and stories are way more interesting then the current iteration. Is it another example of a guy who's process worked in one environment but not in another? IDK. He's a genius and deserves the praise, but I dont understand the infatuation from an investment perspective anymore. 

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Greetings! I am actually the individual who was interested in a John Malone / Liberty corner of COBF,so thanks @Parsad for creating this thread. I have been lurking for a while now but this is my first post.

 

I am as interested in criticisms and complaints of the Malone / Liberty companies as praise, so while my bias is positive, the intention certainly wasn’t for a strictly fan-club conversation. I have a small amount of my portfolio across their universe of companies, premised mostly on their shareholder orientation and John Malone’s reputation (I also have a favorable impression of Greg Maffei who is now the day to day quarterback of a segment of these companies). Some of my confidence (which is relatively low but high enough to invest) in their abilities is the confluence I see with other investors I trust, primarily Weschler. That said, I find their capital allocation strategies and organizing structure (as a young and new-ish investor) fairly complex and am not sure how much is “talking the talk” vs walking the walk when it comes to financial discipline, long-term orientation and shareholder-friendliness, so remain skeptical for now and thought it would be useful to have a forum to discuss and gain insight from others.

 

I consider the universe as something like (and limited to A shares here for simplicity but most have A - B - C/K share classes):

  • Liberty Media tracking stocks for Formula One (FWONA), Sirius XM (LXSMA), and the Atlanta Braves (BATRA), managed by Maffei.
  • Liberty Broadband, which primarily represents their interest in Charter (LBRDA), managed by Maffei.
  • Liberty TripAdvisor Holdings (LTRPA)
  • Liberty Media Acquisition Corporation (LMAC), their SPAC.
  • Qurate Retail (QRTEA).
  • Liberty Global (LBTYA), managed by Mike Fries.
  • Liberty Latin America (LILA)
  • Discovery (DISCA), which post merger w/ Warner Media won’t be “controlled” any longer by Malone but he’ll maintain a significant interest. Maffei as far as I know doesn’t own shares here and is more skeptical.

Malone and Maffei both own significant stakes in Liberty Media, Liberty Broadband, and Qurate. Things diverge at Liberty Global, Liberty Latin America, and Discovery which are primarily Malone holdings and not Maffei. As far as I can tell Malone doesn’t own LTRPA and as far as I can tell most ownership of Maffei is due to stock option grants and non-cash compensation, not direct ownership (but I find it hard to tell so this might be wrong).

 

Anyway, I’m just glad to see some interest already from the community in this topic!

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2 hours ago, CorpRaider said:

I am reading cable cowboy currently and it seems like they are going to blow up from too much leverage.  Like legendary business genius paul allen's charter did.  NGMI

I don't want to spoil the ending for you but they don't blow up and Malone does just fine (pretty well in fact).

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Edit: I see there's already a specific thread so perhaps better to post there (apologies should've checked first).

 

I would be interested in member opinions on the value of QRTEA relative to current price, if anyone has looked at the company closely. There are plenty of takes on Seeking Alpha, but I’d much prefer to hear opinions from this group. It feels intriguing at less than 3x FCF and an explicit plan to return excess capital to shareholders, though I have no great insight into the future potential.

 

Malone and Maffei both seem bullish (Maffei offered to buy out Malone’s supervoting shares at $13 recently, though I don't think that has actually happened).

 

From Liberty’s recent Investor Day Q&A (about 3:14:00 in the video shared above):

 

“John Malone: ‘Qurate seems from a pure economic analysis point of view to be undervalued. Just as a multiple of its ability to generate levered free cash flow. And the strategy of Qurate, which has been a balance of buybacks and, at the end of a season, looking at the cash position of the company and deciding whether or not special dividends are appropriate, I believe, has the promise of providing exceptional returns in the future.’

 

Maffei: ‘I agree.’”

Edited by ElstonG
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LSXMK is dirt cheap with a 10% FCF yield look-through.  I've been buying a lot recently, given that Liberty is now above 80%.  Several ways to win here currently.  NAV spread is basically 30%, SIRI buybacks which LSXMK sells into, SIRI divy is used to buyback the tracker, and a possible ATB offering.  All are highly likely IMHO.

Edited by ValueMaven
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16 hours ago, ValueMaven said:

NAV spread is basically 30%

Curious how much weight the discount argument is holding for you relative to other buy factors. My impression is that management/shareholders have expected the discount to narrow since ~2017-2018 (when it was as high as 30% then too). That’s obviously not a huge amount of time to wait but it does make me worry I’m missing something structural in the assumption it’ll narrow and stay narrow. If reaching 80% is expected to be a catalyst, hasn’t the market known about the trajectory for years and wouldn’t we have expected the discount to narrow based on that expectation?

 

(Sorry if I’m missing something obvious. I’m a beginner and excited by aspects of LSXMK - management and business characters of SIRI - but I don’t understand why the discount has persisted as long as it has.)

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1 hour ago, ElstonG said:

Curious how much weight the discount argument is holding for you relative to other buy factors. My impression is that management/shareholders have expected the discount to narrow since ~2017-2018 (when it was as high as 30% then too). That’s obviously not a huge amount of time to wait but it does make me worry I’m missing something structural in the assumption it’ll narrow and stay narrow. If reaching 80% is expected to be a catalyst, hasn’t the market known about the trajectory for years and wouldn’t we have expected the discount to narrow based on that expectation?

 

(Sorry if I’m missing something obvious. I’m a beginner and excited by aspects of LSXMK - management and business characters of SIRI - but I don’t understand why the discount has persisted as long as it has.)

People don’t give a damn about NAV discounts. If anything, those discounts have been going up over the years, not going down. Examples are Exor, SFTBY, PRSOY, Bollore.

These discounts don’t go away by themselves. Only value realization, simplifications, buybacks or structural changes will do so.

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Totally disagree.  Look at Liberty Broadband.  All of those companies listed above are VASTLY different/materially more COMPLEX then LSXMK - which has ONLY TWO major assets - both of which are publicly traded: 80.2% stake in SIRI, and 32% stake in LYV.  Short term investors were expecting an ATB announcement at Liberty's Investor day - it didn't happen (if that occurred there would have been massive NAV compression right away).  All Maffei talked about was 'optionality and flexibility'.  Study SIRI and you realize its a very under-appreciated asset with great management team.  I think Liberty's cost basis is like 12 cents a share lol.  SIRI stock is fairly illiquid, as is LSXMK ... there are some major long-term holders (Berkshire which just increased its stake, Klarman, Horizon Kinetics etc) in there who see how this plays out - and are not selling.  Multiple ways to win right now at these levels: ATB spinout, Continued SIRI/LSXMK buybacks, No tax leakage anymore, NAV compression etc

Edited by ValueMaven
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1 hour ago, Spekulatius said:

People don’t give a damn about NAV discounts. If anything, those discounts have been going up over the years, not going down. Examples are Exor, SFTBY, PRSOY, Bollore.

These discounts don’t go away by themselves. Only value realization, simplifications, buybacks or structural changes will do so.

Malone discussed discounts to NAV a few years ago at the Liberty Investor Day.  He said something along the lines of, "A discount to NAV is a deferred asset" and an intelligent management can take advantage of both discounts to NAV and premiums to NAV over time (or more simply, undervaluation or overvaluation) through shrewd capital allocation.  He then went on to say that his companies had repurchased shares in the 38 out of 40 years in his career.

 

As a function of math, if you ultimately realize value in a company (say through a sale) at some high point in NAV, then repurchases at discounts to NAV along the way well increase returns to shareholders, sometimes greatly.  The key is to buy in when the NAV is relatively low and the discount is relatively high.

 

An example is News Corporation, which repurchased tens of billions of dollars of stock at large discounts to NAV from 2011 through its acquisition by Disney in 2019.  People kvetched for many years about the discount, but its existence provided outstanding returns to some investors though both a cheap initial price and repurchases by the company at subsequent low prices.  When Murdoch eventually pulled the ripcord, those shareholders benefited greatly..

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Cable Cowboy address this and various trackers, and how Malone monetized these over long periods of time in great length.  It is a great read.  Even look at the swap they did with Berkshire 2 weeks ago to minimize taxes and allow for possibility for an ATB in the future ....  This is a great interview too - where he addresses trackers.  BTW: LSXMK is Malone's second largest position outside of Liberty Broadband 

 

 

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