Use this link to access my Google Drive spreadsheet. It may or may not be helpful in figuring out whether one should buy CHTR or LBRDA/B/K. Please be careful because the spreadsheet may contain errors…
Here are some issues to watch out for:
- The value of TruePosition is uncertain. I assumed $300M. See my post on TruePosition and on the Broadband spin.
- The present value of the deferred tax liabilities is uncertain. It might be reasonable to assume that $1 due in the future is worth $0.20 today. I think that Malone will not dispose of his Charter or TWC shares in a tax-inefficient manner any time soon. He could conceivably hold onto Charter for decades. He may very well swap TWC shares with TWC for shares in the TWC+Comcast spinoff that will be managed by Charter. So, I think that he will defer the taxes on TWC shares for a very, very long time.
- I have no idea what the cost basis is for the TWC shares. I suspect that it is something extremely low. However, Broadband’s financial statements in the S-1 spinoff filing shows that Broadband’s deferred tax liabilities are extremely low. In any case, the DTLs on the TWC shares aren’t particularly significant.
- EDIT (8/26/2014): I don’t think I handled the call options that were sold on the TWC shares correctly.
- I ignore all of Liberty Broadband’s other assets and liabilities. I don’t think that they are material compared to what TruePosition is worth.
- I may have performed the rights offering calculation incorrectly.
- I may have handled the diluted share count incorrectly.
*Disclosure: I already own LMCA. My plan is to hold onto my shares of the parent and the spinoff.