Contango recently announced a merger with Crimson Exploration. It’s crazy. I think that the late Ken Peak chose the wrong person to be Contango’s CEO.
Need to free up cash for other ideas. I think that other stocks are a much better idea than Intel right now.
Liberty Media is John Malone’s flagship. Of all of Malone’s companies, I am interested in Media the most since:
- It is likely that Malone will continue to put his best ideas into it. This is probably the company that will grow the fastest.
- Continued share repurchases suggest that it trades at a slight discount to the value of its assets.
Liberty Media is difficult to understand. Historically, John Malone has used complexity as a weapon against institutional investors to mislead them into selling stock at too low a price. Malone’s complex Liberty companies have always tended to trade at a discount to what its assets are worth. This allows Malone to continually buy back shares at low prices (this is like free money). A secondary effect of this is that size becomes less of an anchor on future performance. Historically, you would have done the best if you had stuck to buying the most complex part of Malone’s empire that he owns the most of. He keeps the best businesses hidden in his flapship and spins off the mature businesses (e.g. Global’s cable assets), the slow-growing ones, and the not-so-great businesses (e.g. production companies/Ascent). So, I would expect that his flagship company (Liberty Media) will grow faster than the rest of his empire.
This is a great business at a good price.
I’m excited about this company and this seems to be a stock that many people simply gloss over. This is a fantastic business trading at a good price. And it’s a financial company that you can actually understand. They aren’t an investment bank with a book full of opaque derivatives. They aren’t sitting on tail risk from bad insurance deals. And they aren’t sitting on hidden losses from bad loans. They do mortgage servicing and they’re really good at it.
Where I think Malone thinks the media industry is headed
“I think it’s at a point in history when the most addictive thing in the communications world is high-speed connectivity,” he said. “Everywhere in the world that we operate, we’ve just seen the public want more and more data rate. Whether it’s wireless or wired. There’s a big appetite for it. Cable technology right now is the most cost-effective way to deliver that growth in speed.”
– John Malone, CNBC interview (http://www.cnbc.com/id/100637283)
I think that John Malone is one of the best CEOs and capital allocators out there. Here’s what he does and why he’s good.
The short story is this. Selwyn Resources recently announced a deal to sell its flagship deposit for $50M. After paying off its debt, it should be able to distribute $40M to shareholders (or around $0.10/share). Most of Selwyn’s shareholders now seem to be in favour of the dividend. It seems likely to me that Harlan Meade will eventually get kicked out (though this is not a sure thing).
Here’s RCF’s position on it:
*Disclosure: I own… 1 share of Selwyn. I may buy Selwyn shares in the future if my orders get filled.
I think that institutional investors generally don’t know what they’re doing when it comes to mining stocks. If they were smarter, many problems with mining stocks wouldn’t be so widespread.
Dollar Tree is a quickly growing retailer with a P/E around 18 and revenue growth in the ballpark of 17%/year. I don’t think it’s that cheap right now but it’s on my radar since it is a quality business with very high returns on capital.