What I've been up to & a new pick
Hi everyone. I figured that I would drop in for a few seconds to say hello. I've been very quiet on my blog this week because I am on vacation at my cabin in the mountains of Wyoming. I've been coming out here all my life. This is my 20-something-ish trip to Medicine Bow National Forest. It's absolutely amazing how much things have changed over the years. When I first started coming out we didn't even have a land-line in my cabin. To use the telephone, one had to drive half an hour to the nearest pay phone. Flash forward to today and I am able to access the Internet right here on my front porch on my iPhone. I took the picture above on my phone the other day.
It's nice to take a break from the every day grind and forget about the daily fluctuation of the markets. Having said that, as an investing junkie, I have not been completely ignoring things.
I came across a fascinating write-up on Liberty Media Capital (LCAPA) the other day over at Minyanville (which I actually usually find pretty annoying, but kudos to them for a solid article.
Why Investing in Liberty Capital Is Almost a Sure Bet
In short, Liberty Capital is one of those funky tracking stocks that John Malone likes to use within his empire. It represents a group of assets, mostly stakes in public companies, that Liberty Media owns. This includes large positions in Time Warner Cable (TWC), Time Warner (TWX), Sprint Nextel (S), Viacom (VIA), Motorola (MOT), AOL (AOL), Live Nation Entertainment (LYV), CenturyLink (CTL), and Sirius XM Radio (SIRI). At its current share price, Liberty Capital is trading at an astounding 58% of the value of the sum of its parts. Now that's cheap.
Are these my favorite companies in the world? AOL sucks, CenturyTel's land lines aren't great, and while I like Sirius / XM's product the debt-loaded company is constantly teetering on the verge of bankruptcy. But at $0.50 on the dollar I'm definitely interested in them. Plus, a number of the assets are solid. Time Warner Cable, Motorola, and Live Nation all have some attractive qualities.
Using their recent market values, LCAPA's stakes in these companies are currently valued at $107/share (at the time the article was written...probably a little lower today). After backing out $25/share, the value of these assets comes out to around $82/Liberty Capital share. Compare that to its LCAPA's current share price of around $44.
I don't see any immediate catalyst that will close this valuation gap, but Liberty recently announced that it is officially completely spinning-off some of its other tracking stocks, such as Starz. Such a move will likely eliminate the discount that tracking stocks usually trade at. I wouldn't be surprised in the least if Liberty did the same thing with Liberty Capital at some point in the future as well.
I decided to go long LCAPA here in CAPS the other day at $45.85/share.
That's all I have for now. I'm taking it fairly easy this week, but I'll probably be back to regularly blogging during the first week of September...which is one of my favorite months. I love the fall. Cool weather. Football. Ahhhhh.