Given the recent swoon in Charter Communications (CHTR) and Comcast (CMCSA), they both appear attractive. The economics of the cable business are predictable and compelling.
If you suspect that the market has over-reacted to the loss of (lower-margin) video-subscribers, and that these cable companies will adapt and position themselves as the dominant arteries for the flow of data(i.e. 5G etc. will be a complement, not a substitute), then now appears to be a fantastic time to take a substantial position in these companies.
I’ve taken a nearly 4% position in CHTR, and have significant exposure to CMCSA through options. If prices stabilize or go down further over the next couple of weeks, I plan on making a 10% allocation to cable.
Here are some useful links in chronological order:
- June 2015: Oracle of Omaha after the announced merger with Time-Warner Cable when CHTR was trading around $170/share
- September 2015: Punchcard Research did his characteristic deep dive
- Andrew Walker continues to offer informed commentary on CHTR. He looked at it in June and October 2017.
- There are numerous writeups on VIC. Here is a recent one (November 2017) by MarAzul.
- Value Seeker did a deep dive in December 2017. He looked at the cable industry in general and both CMCSA and CHTR in particular.