Artisan Partners, an investment management company, released its “Artisan Value Income Fund” fourth quarter 2022 investor letter. A copy of the same can be downloaded here. In the fourth quarter, its Investor Class fund APFWX returned 10.25%, Advisor Class fund APDWX posted a return of 10.23%, and Institutional Class fund APHWX returned 10.24%, compared to a return of 7.56% for the S&P 500 Index. In addition, please check the fund’s top five holdings to know its best picks in 2022.
Artisan Value Income Fund highlighted stocks like Cable One, Inc. (NYSE:CABO) in the Q4 2022 investor letter. Headquartered in Phoenix, Arizona, Cable One, Inc. (NYSE:CABO) is a data, video, and voice services provider. On April 5, 2023, Cable One, Inc. (NYSE:CABO) stock closed at $696.05 per share. One-month return of Cable One, Inc. (NYSE:CABO) was 3.32%, and its shares lost 53.53% of their value over the last 52 weeks. Cable One, Inc. (NYSE:CABO) has a market capitalization of $4.003 billion.
Artisan Value Income Fund made the following comment about Cable One, Inc. (NYSE:CABO) in its Q4 2022 investor letter:
“Our biggest detractors were H&R Block, Cable One, Inc. (NYSE:CABO) and Blackstone. CABO is a small cable company operating in rural US markets and is an example of an investment in our Capital Structure bucket. CABO and other cable stocks have been punished due to concerns about increasing competition from wireless providers. While wireless companies are entering new markets, 5G is not currently competitive with cable’s download speeds, and based on the physics of wireless data delivery, 5G is unlikely to be competitive with cable for many years, if ever. Cable continues to have a competitive advantage with respect to network speeds, reliability and capital intensity. We like the cable business in general due to its high recurring revenue, pricing power and healthy operating leverage, but there are additional elements in our investment case unique to CABO. Unlike the larger cable companies, CABO has employed a different playbook by de-emphasizing video and phone—two thirds of cable providers’ tripleplay bundles—to focus on broadband to rural homes and businesses. Why is this important? CABO faces far less competition in this business than the average large MSA (Metropolitan Statistical Area) cable company, like Comcast and Charter. Less than 30% of CABO’s customers have access to another provider that can offer speeds over 100 mb/s. Fixed wireless is less competitive, with speeds of under 100 mb/s and spotty execution. As customers cancel video subscriptions, many switch to streaming video over the Internet, and this increased data usage requires a more robust connection, driving growth in CABO’s Internet business. This playbook has been working for the company, as it has steadily grown in each of the past six years. At the time of our purchase in May 2022, the stock was off about 47% from its high in September 2021, allowing us to purchase shares at a low-teens P/E multiple for a business that has been growing EPS at a 20%+ annualized rate. We believe this valuation tilts outcomes in our favor. We also purchased convertible bonds maturing in 2026 and 2028 that were trading at significant discounts to par. In addition to boosting the income received from the combined stock and bond positions, there is implied yield from the optionality from potential conversion to common stock. This conversion feature makes these securities more attractive than the 4% fixed notes outstanding.”
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Cable One, Inc. (NYSE:CABO) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 27 hedge fund portfolios held Cable One, Inc. (NYSE:CABO) at the end of the fourth quarter which was 22 in the previous quarter.
We discussed Cable One, Inc. (NYSE:CABO) in another article and shared Heartland Advisors’ views on the company. In addition, please check out our hedge fund investor letters Q4 2022 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.
