2. Charter Communications Inc. (NASDAQ:CHTR)
Short % of Float As of April 16: 15.92%
Number of Hedge Fund Holders: 71
Charter Communications Inc. (NASDAQ:CHTR) is a broadband connectivity and cable operator company that serves residential and commercial customers in the US. It offers subscription-based internet, video, and mobile & voice services. It also offers a suite of broadband connectivity services, Spectrum internet products, in-home & out-of-home WiFi, and Spectrum WiFi services.
The company is focused on using its converged connectivity capabilities, with Spectrum Mobile as a central pillar. The Spectrum Mobile business added over 2 million Spectrum Mobile lines in 2024, establishing its position as the fastest-growing mobile provider in the US. While Spectrum Mobile’s penetration stands at ~8% of Charter’s 57 million residential and SMB passings, its substantial subscriber additions were a key factor in the company’s overall 1% revenue growth for the full year.
The company’s strategy, reinforced by the Life Unlimited brand refresh, emphasizes bundled services such as mobile at competitive prices. Charter Communications Inc. (NASDAQ:CHTR) believes that the ability to integrate its wireline and wireless services offers a unique value proposition.
Conventum – Alluvium Global Fund increased its position in the company and stated the following regarding Charter Communications, Inc. (NASDAQ:CHTR) in its Q4 2024 investor letter:
“We discussed in our last report that Liberty Broadband’s 40.7% return in the September quarter reflected an impending deal (explained here) with its main investment, Charter Communications, Inc. (NASDAQ:CHTR). In early November Charter released its third quarter update, which the market (and us) viewed favourably, and Liberty’s share price rose 11.7% on the day. As a result, the Fund’s position in Liberty reached 8.4%. Cognisant of the 5/10/40 UCITS restrictions (yet wanting to maintain our position in the underlying assets) we sold a fair chunk of Liberty (to get it under 5%) and bought a little Charter. A short time later the companies reached agreement on the consolidation deal. The market’s reaction (Liberty’s share price fell 4.7% on the day, whereas Charter’s rose 3.6%) suggests this was less favourable to Liberty than anticipated (we suspect due to the long timeframe). And as Liberty fell 3.2% and Charter rose 5.8% over the quarter, the discount that Liberty trades (to the implied Charter price) has only widened. This is unwarranted in our view, particularly as one of Liberty’s businesses, GCI, is not part of the deal. Our focus is on having access to these assets at the best possible price. We are not perturbed by the deal, whether or not it consummates, nor its timeline. And, there are no additional costs to holding Liberty rather than Charter (nor any foregone dividends). On our analysis, these US broadband assets (via the Charter corporate structure) are providing a circa 9.0% earnings yield and 6.5% free cash flow yield, which we are confident will continue to grow. We are comfortable with the Fund’s 5.6% investment, as represented by its positions of 1.5% in Charter and 4.1% in Liberty.”
