Berkshire Hathaway Buys More Liberty SiriusXM

Warren Buffett's Berkshire Hathaway has submitted a couple of Form 4's with the SEC regarding its position in Liberty Sirius XM (LSXMA / LSXMK). 

Per the filings, Berkshire was out buying both the Series C stock (LSXMK) and the Series A stock (LSXMA).  They purchased over 3.87 million LSXMK shares across April 20th, 21st, and 24th at weighted average prices between $38.7043 and $40.62.  After these buys, Berkshire now owns 27.23 million shares of LSXMK.

They also bought over 2.47 million LSXMA shares in total across the same dates at weighted average prices between $38.6046 and $40.795.  After these buys, they now own over 13.15 million LSXMA shares.

Liberty Media's Greg Maffei also tweeted: "Nice to have Berkshire, Warren B, and Ted Weschler step up their $LSXMA investment.  Thanks.  $SIRI. #hearmysiri." And then followed it up with: "Forgot to bow to altar: $BRK.A #OmahaRules."

Given that Ted Weschler was mentioned as the investor involved in this name, it seems natural to draw similarities to a past position of his.  At his old hedge fund Peninsula, Weschler previously owned DirecTV and a large part of the thesis there was a levered buyback.  Given that Sirius XM seems to be following a similar playbook, it seems plausible that this is one of the reasons Weschler is attracted to this name as there are some similarities.  Not to mention, Sirius XM has grown subscribers consistently over the past 7 years.

Per Google Finance, Liberty Sirius XM "owns interests in subsidiaries and other companies, which are engaged in the media and entertainment industries. The Company's principal businesses and assets include its consolidated subsidiaries Sirius XM Holdings Inc. (SIRIUS XM) and Braves Holdings, LLC (Braves Holdings), and its equity affiliate Live Nation Entertainment, Inc. (Live Nation). The Company's segments are SIRIUS XM, and Corporate and other. SIRIUS XM provides a subscription-based satellite radio service. Through its subsidiaries and affiliates, the Company principally operates in North America. The Company also owns a portfolio of minority equity investments in publicly traded media companies, including Time Warner, Inc. and Viacom, Inc. SIRIUS XM transmits music, sports, entertainment, comedy, talk, news, traffic and weather channels, as well as infotainment services, in the United States on a subscription fee basis through two satellite radio systems. "

What We're Reading ~ 2/8/17

Misbehaving: The Making of Behavioral Economics [Richard Thaler]

Honored to be listed in 2016's most influential finance Twitter accounts [Sentieo]

Shameless plug: if you don't already, follow @marketfolly on Twitter

Mitigating short exposure: learning from others' mistakes [CFA Institute]

Interview with Ed Thorp, the man who beat the casinos & markets [FT]

Stop chasing the wrong kind of growth [Harvard Business Review]

On analyst ratings and the institutional imperative [Base Hit Investing]

Old Mutual boss on how to run an active fund patiently [Daily Mail]

FIZZ: The secret history of the LaCroix fad [Bon Appetit]

How streaming is changing music consumption [HeavyBlogisHeavy]

Cannabalization, intense competition both roadblocks for Chipotle [Peridot]

The individual investors' performance incentive system [Rational Walk]

A look at NAFTA and American manufacturing [Vox]

Fidelity's bond king banks on Trump reflation trade [Bloomberg]

Facebook is trying everything to re-enter China and it's not working [WSJ]

BlackRock's robot stock-pickers post record losses [Bloomberg]

What We're Reading ~ Analytical Links 1/8/14

Investors/entrepreneurs predict trends, stocks & private companies to watch in 2014 [Forbes]

Compilation of what a lot of people learned in 2013 [Reformed Broker]

Individual investor stock allocation hits post-crisis high [Pragmatic Capitalism]

The world economy's shifting challenges [George Soros]

The best financial advice I ever got (or gave) [WSJ]

The 2014 buy list from [Crossing Wall Street]

Winners of 2013: boring investors [WSJ]

Why the P/E ratio doesn't always matter but cash flow is crucial [ValueWalk]

More 2014 predictions from market watchers [Yahoo Finance]

Liberty Media seeks full ownership of Sirius XM [Dealbook]

Billionaire Malone returns to empire building amid cord cutting [Bloomberg]

Hertz eyes sale of equipment rental unit [FT]

Venture Capitalists predict where they'll invest in 2014 [Forbes]

The art of misdirection [TED]

The 'internet of things' could be the next industrial revolution [DenverPost]

Lee Cooperman's Thesis on Covidien & Sirius XM Radio: Omega Advisors Q1 Letter

Lee Cooperman's hedge fund Omega Advisors' Overseas Partners returned 10.9% in the first quarter of 2013 and has seen annualized returns of 16.6% since inception.  We wanted to post an excerpt from Omega's Q1 letter highlighting Cooperman's thesis on Covidien (COV) and Sirius XM Radio (SIRI).


Covidien (COV): A Spin-Off Play

Cooperman likes Covidien because the company is spinning off a lower margin, lower growth business, Mallinckrodt (MNK).  He fancies the standalone COV business afterwards and writes about the spinoff:

"First, it will enable MNK to invest more appropriately in maximizing a number of underappreciated  opportunities in its pharma pipeline, while pruning assets with sub-optimal growth characteristics. Second, by  divesting itself of the lower margin and lower growth MNK businesses, stand-alone COV, which operates in  attractive medical device and supply segments with favorable competitive dynamics and end-market growth,  will drive margin expansion that should translate into a higher multiple in-line with its comparables. We further  expect COV to pursue actions, including cost reductions and capital deployment (noting the recently  announced $3-billion share-repurchase authorization on top of the $425m outstanding on its previous  authorization) to offset the transitory transaction-related tax and other dis-synergies from the spin, thus driving  upside to consensus pro forma estimates. We estimate new COV will generate EPS of $4.58 in FY14 and $5.13  in FY15, while MNK will generate $0.41 in FY14 and $0.48 in FY15, above pro-forma street estimates. Using  conservative target P/E multiples, our sum-of-the-parts valuation implies 25% upside over the next 12 months  against limited downside given the current discount multiple to peers, creating an attractive risk/reward in the  stock approaching the mid-year spin-off of MNK that is likely to act as a catalyst for the shares."

COV has been largely favored by 'vanilla' managers such as mutual funds and index funds.  Looking at the top holders, there weren't many hedge funds involved as of the end of Q1 but that could have changed since then due to the impending spin-off.


Omega's Thesis on Sirius XM (SIRI)

Cooperman's fund has held a SIRI position for a while, but continues to like the name because the company has a ton of subscribers and has negotiating leverage when acquiring exclusive content.  Omega has identified four growth drivers for Sirius XM:

"First, SIRI can be more proactive in  addressing the used-car market and converting people who have the hardware in the car into paying subscribers  at little to no cost. Second, a rising SAAR lends itself to higher additions from new-car sales. Third, current  estimates of almost 100-million cars with SIRI preinstalled by 2017 points to massive potential over the next  few years compared with the current installed base. And fourth, the price hike announced in 2011 and  implemented over the last year demonstrates significant pricing power embedded in this model. We believe  that the best way to value SIRI is on a free-cash-flow per share metric as the company has over $7 billion in  gross NOLs, is buying back shares aggressively, and at these levels the amount of NOL per share increases via  the buyback. Therefore, the more aggressive SIRI is, the longer the NOL lasts per share...to the point where, in  our models, if the stock stays at $3.00 per share, it is possible to buy back the entire company before the NOL  runs out. We think downside is limited and see significant potential in the years ahead for SIRI, with a price  objective of $5 using a low-teen multiple of 2015 cash flow."

SIRI has been a favorite play among many hedge funds.  While Omega Advisors is one of the top institutional holders of SIRI, other hedge funds involved as of the end of Q1 include: Blue Ridge Capital, Coatue Management, Slate Path Capital, and Hound Partners.

Not to mention, John Malone's Liberty Media (LMCA) has amassed quite a sizable stake in SIRI


Omega Looking At Infrastructure Plays Too

Cooperman and his colleague Steve Einhorn point out in their Q1 letter that infrastructure-related investments should do well going forward and they've been searching for potential investments as they see a quest for energy independence and a manufacturing renaissance as catalysts.

For more from this hedge fund manager, we recently highlighted Omega's new position in PennyMac Financial Services and also flagged  Cooperman's market thoughts from the SALT Conference.  

TPG-Axon's Dinakar Singh Likes Sirius XM & Time Warner Cable: Interview

Dinakar Singh, CEO of $4 billion TPG-Axon Capital recently sat down with Bloomberg TV so we wanted to post up some of the highlights of his rare appearance.

It seems as though he is betting against telecom stocks and is also bearish on some financials (in particular US regional banks).  He's bullish on names like Sirius XM (SIRI), Time Warner Cable (TWC), and W.R. Grace (GRA).  He sees growth in the chemical, aerospace, and healthcare industries.

A graphic on screen showed TPG-Axon's key long exposures in tech & media: SIRI, TWC, Viacom (VIA.B), Kabel Deutschland, Equinix (EQIX), Expedia (EXPE), Priceline.com (PCLN), and Yandex (YNDX).


On the current environment:   “For us, we pick stocks. That is how we make money. More and more, everyone has become more emotional in markets. We get scared by headlines and we all start acting the same way whether you are a CEO or a consumer. Jobs do matter. I think when you look at the U.S. in the last number of months, our view coming in this year is that people got too excited. There was a bounce back from last year and some good weather but it was going to be a slow gradual sloppy messy restructuring without a big recovery. Things have reversed. I think people are getting too pessimistic…I think ultimately consumers and CEOs are reading the same headlines and scared. I think you are seeing a cyclical or temporary step down. We do not think there one should expect a big bounce, but there won’t be much of a plunge either. It feels like the numbers are crummy but they will probably stay this way for a while. The fiscal cliff is a real issue. I think you're seeing an impact right now.”  


On how to play this market:   “People have gotten scared and they’re paying a lot for safety. On the safety side, people like dividends in safe industries. So Verizon is trading 18 times earnings because people want safety and a good dividend. There are companies like Time Warner Cable that we think are just as defensive but they did not happen to pay a dividend, they have even better cash flow, but they traded as a result much less well last year. For us, big opportunity. So media and cable that’s very cash flow rich and where we think management is going to turn that spigot on and turn it into a dividend or buy back machine that makes sense. Sirius, Time Warner Cable, companies like that. On the cyclical side, not everything is terrible. There are some sectors where we think there is good structural growth and balance sheets will be put to work. Some chemical companies are very good restructuring candidates. Aerospace suppliers.  Aerospace is in the middle innings of a very long term upgrade cycle.”


On telecom services:   “In a hedge fund, this is called a funding short. It is not that you think it is terrible and going straight to 0, but it is priced fully and not going up much so not a very good risk reward. Within telecom services there are two categories. There are the Verizons, we get it, they trade here for a reason, but they are pretty fully priced. On the other side, there are other companies that are legacy telecom companies where the dividend is a very high, but business really is eroding. It is priced well today because of a high dividend, but it is not sustainable. When you look around the world, a lot of high dividend stocks in Europe are not trading well because people are looking at them and saying I get it. I have a dividend today but it might not be there tomorrow.”


On China:   “If you look at China specifically, multiples had really collapsed…You have two general types of companies. Big, state-owned companies that people don’t trust and private companies that people really don’t trust. There isn’t a lot that trades at big multiples anymore. I think if you can find cases where there is real growth and they can pay cash back to you, you’ll make money.”


Embedded below is the first part of the interview of Dinakar Singh's interview with Bloomberg TV:



And here's the second part:

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The free sample issue includes quick investment thesis pitches on Sirius XM Radio (SIRI), Express Scripts (ESRX), Alcon (has since been bought out), and Cisco Systems (CSCO).

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Notes From Ira Sohn West: John Burbank, Barry Rosenstein, Jeffrey Ubben, Brian Zied & More

Zero Hedge recently posted up notes from the Ira Sohn West Conference that just took place out in San Francisco. It included a heavy-hitting speaker line-up of prominent hedge fund managers. Let's quickly summarize their investment picks and presentations:

John Burbank of Passport Capital: He focused on how the US should be viewed as an 'emerging market' from an investment perspective due to increased sovereign risk of the US. Burbank argues that the US is at an inflection point and can head in the direction of either Argentina or Germany. You can read more from this manager in a recent interview Burbank did as well.

Barry Rosenstein of JANA Partners: He thinks the activist investor environment is improving. Rosenstein also points out the high levels of cash at corporations and notes that private equity has $500 billion on the sidelines. In terms of investment picks, he likes Netherlands based TNT (TNT NA). The global transport company could be attractive to FedEx, who only has small market share in Europe. TNT trades at 6x EBITDA and 11x earnings. Rosenstein actually thinks the company will break up in the next 6-9 months and thinks it goes to 27 euros from its current price of 20 euros. The JANA Partners fund managers also is fond of Charles River Labs (CRL) as the company has raised prices and gained market share. Currently at $32, he believes $46 is attainable with a breakup value of above $50 per share.

Brian Zied of Charter Bridge Capital: Before founding Charter Bridge, Zied was previously a Managing Director at Lee Ainslie's Maverick Capital. Zied likes Sirius XM Radio (SIRI) here as 60% of new cars have built in satellite radios and 46% of those convert into paying customers. While the company is leveraged, he expects them to pay off debt soon. He also highlights John Malone's significant ownership stake in the company, arguing that they could acquire Sirius.

Jeffrey Ubben of ValueAct Capital: In his activist investing, he looks for oligopolistic industries and intellectual property. In recent investments, his hedge fund acquired 20% of Valeant Pharmaceuticals (VRX) as a turnaround story. We've covered some of ValueAct's recent portfolio activity here.


Many other manages provided their thoughts and latest investment ideas at the event. Embedded below courtesy of Zero Hedge is a set of notes from the Ira Sohn West Conference (Email readers will need to come to the site to view it):



For more on the latest hedge fund portfolio movements, click here to scroll through our coverage.