Artisan Partners, an investment management company, released its “Artisan Value Income Fund” third quarter 2023 investor letter. A copy of the same can be downloaded here. Us equities experienced a pullback in Q3 following the strong returns in the first half of 2023. The fund’s Investor Class APFWX, Advisor Class APDWX, and Institutional Class APHWX returned -3.51%, -3.60%, and -3.49% respectively, in the quarter compared to -3.27% return for the S&P 500 Index. In addition, you can check the top 5 holdings of the strategy to know its best picks in 2023.
Artisan Value Income Fund highlighted stocks like Cable One, Inc. (NYSE:CABO) in the Q3 2023 investor letter. Headquartered in Phoenix, Arizona, Cable One, Inc. (NYSE:CABO) is a data, video, and voice services provider. On December 5, 2023, Cable One, Inc. (NYSE:CABO) stock closed at $522.30 per share. One-month return of Cable One, Inc. (NYSE:CABO) was -11.19%, and its shares lost 25.96% of their value over the last 52 weeks. Cable One, Inc. (NYSE:CABO) has a market capitalization of $2.934 billion.
Artisan Value Income Fund made the following comment about Cable One, Inc. (NYSE:CABO) in its Q3 2023 investor letter:
“We made one new purchase in Q3, adding Cable One, Inc. (NYSE:CABO)’s 4% coupon bonds maturing in 2030. Cable One (CABO) is a small cable company operating in rural US markets. We also hold CABO’s common equity, as well as convertible bonds maturing in 2026 and 2028. The bonds maturing in 2030 were yielding 8%+ when we purchased them in August, providing a potential equity-type total return, in our view. We believe CABO’s common shares and bonds have been punished due to concerns about slowing subscriber growth and increasing competition from fiber and fixed wireless providers. While wireless companies are entering new markets, cable continues to have a competitive advantage with respect to network speeds, reliability and capital intensity. Cable is also a stable business due to its stickiness as subscription cancellations are infrequent. CABO has high recurring revenue, pricing power and healthy operating leverage—all desirable characteristics. It also generates a lot of free cash flow, which can be used to not only service debt and fund capital expenditures, but also retire stock and pay a dividend (currently yielding ~1.8%). In fact, CABO is generating over $300 million per year in free cash flow, even with ongoing capex, while interest coverage is 5X. Even if the company needed to refinance all its debt at today’s higher rates, it could cover its interest burden and still have positive free cash flow. Further, there are over $1 billion in long-term investments on the balance sheet that aren’t included in leverage ratios. Leverage would be much lower if included. These investments can be monetized over time and would contribute to the company’s ability to fund growth and service its debts. As a result, we believe CABO should be able to meet its financial obligations.”
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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, 25 hedge fund portfolios held Cable One, Inc. (NYSE:CABO) at the end of third quarter which was 27 in the previous quarter.
We discussed Cable One, Inc. (NYSE:CABO) in another article and shared The London Company Small Cap Strategy’s views on the company. In addition, please check out our hedge fund investor letters Q3 2023 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.
