Alphyn Capital Management, an investment management firm, released its first-quarter 2024 investor letter. A copy of the letter can be downloaded here. The Master Account of the fund returned 7.1% net in the first quarter compared to 10.6% for the S&P500 Index. As of March 31, 2024, the top ten holdings accounted for approximately 66% of the portfolio, and approximately 8.2% of the portfolio was held in cash. In addition, please check the fund’s top five holdings to know its best picks in 2024.
Alphyn Capital Management featured stocks like Liberty Broadband Corporation (NASDAQ:LBRDA) in the first quarter 2024 investor letter. Headquartered in Englewood, Colorado, Liberty Broadband Corporation (NASDAQ:LBRDA) provides communications services. On April 10, 2024, Liberty Broadband Corporation (NASDAQ:LBRDA) stock closed at $49.70 per share. One-month return of Liberty Broadband Corporation (NASDAQ:LBRDA) was -12.53%, and its shares lost 37.35% of their value over the last 52 weeks. Liberty Broadband Corporation (NASDAQ:LBRDA) has a market capitalization of $7.19 billion.
Alphyn Capital Management stated the following regarding Liberty Broadband Corporation (NASDAQ:LBRDA) in its first quarter 2024 investor letter:
“I exited our position in Liberty Broadband Corporation (NASDAQ:LBRDA). This investment was particularly frustrating, as it had been a solid performer for us in the past. When I first evaluated the company five years ago, Charter was perceived to be threatened by cord-cutting. However, my analysis was correct in predicting that this would benefit the company since broadband income is far more profitable than cable TV. As the company expanded its coverage and improved customer retention through enhanced service, net broadband additions were achieved at a high margin, driving growth in the mid-teens.
More recently, fixed wireless and fiber competitors have challenged the broadband business. The original thesis held that cable’s entrenched position would render it ROI-negative for competitors to enter the market, assuming they would avoid burning money in a venture against cable’s dominant, cost-effective, high-speed connection. Yet, fixed wireless surprisingly captured a significant share of incremental business from cable in this mature industry, impacting Charter’s growth narrative.
As I dug into modeling potential returns in more detail, a few things stood out: Firstly, Charter’s investments appeared more defensive, aimed at stemming customer losses rather than pursuing significant growth opportunities, and the ROIs were not as attractive as I would want. Second, the modeling was highly sensitive to small assumptions, not least on the discount rate and small changes in terminal growth rates – which meant the range of potential outcomes was too wide for comfort (the exact opposite of Buffett’s “one-foot hurdle”). Third, the company’s mechanical leveraged buyback strategy had likely destroyed value buying at much higher prices than today’s, adding leverage risk. The last straw for me was when the company announced negative broadband additions without a seemingly robust plan to address the issue rather than just continue what they were doing, which was not working. Going forward, I intend to be more vigilant when a company’s core business is under sustained competitive threat.”
A technician in a telecom facility installing wireless routers and operating on a computer.
Liberty Broadband Corporation (NASDAQ:LBRDA) is not on our list of 30 Most Popular Stocks Among Hedge Funds. At the end of the fourth quarter, Liberty Broadband Corporation (NASDAQ:LBRDA) was held by 19 hedge fund portfolios, compared to 24 in the previous quarter, according to our database.
We discussed Liberty Broadband Corporation (NASDAQ:LBRDA) in another article and shared Oakmark Select Fund’s views on the company. In addition, please check out our hedge fund investor letters Q1 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
