Bought more of LBTYA at 34.7.
EV/EBITDA ratio of 8.34, below the US cable tv average of 11.31 and its 10 year historical median of 9.53. (Kindly note that I did not examine if there’s any one off income.)
My benchmark isn’t quite accurate as Liberty operates in the Eurozone but it will do since I am managing my own portfolio. There’s also more to why I am buying LBTYA than valuation
It’s hard to value John Malone’s companies as they are always unorthodox in their practices. That said, his preference is for his companies to be valued by the cash they generate. The cable cowboy was after all the first person to use EBITDA and his track record showed that he does know how to use it to its fullest effects.
His strategies are multi-fold – leverage stable predictable cash flow, financial engineering, tax shield, and stock buybacks – to accelerate the growth of his companies. Truth be told, no one quite knows what’s going on with his companies.
So why am I buying into his company? 1) relatively cheap valuation, 2) tailwind for telecommunications and 3) John Malone and his team of world class operators!
I can go on and on about the alignment of interest between management and shareholders, the unique moat created by a series of other John Malone companies but what’s important are the 3 points above.
Check out the book Outsiders if you haven’t and you’ll know why I think John Malone is a world class operator.