Post edited 2:07 pm – March 14, 2011 by stormam
Has anyone looked at CHTR post emergence? It is amazingly cheap. Investing in CapX this year yet still going to do ~10% FCF yield => normalized FCF is +20% of mkt cap. It has a fair amount of debt, but 4.5x is more than sustainable in cable. Paul Allen is no longer a majority voter and the former CEO and CFO are now gone. Significant NOL assets, expensive debt relative to peers and below industry margins makes it look like an ideal acquisition by the big guys. I don't know if it is too big now, but it certainly seems reasonable. Growing revenue, EBITDA and FCF at a mid-single digit rate.
I get to $80 or so a share in a take-out with mid teens for the NOLs, some debt savings cost, better programming costs and G&A synergies. Otherwise, it can utilize its cash flow to pay down debt which will accrete to shareholders assuming the multiple remains at this pretty low 5.5x-6x EV/EBITDA.
Looks like little volume since no one is paying attention. I kind of like going long CHTR and short NFLX. Long the cheap fixed asset with high barriers to entry (every company to overbuild is either bankrupt or exiting the mkt) and short the 0-barriers ultra-expensive content aggregator (not owner, just aggregator).
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