As reported in a recently filed Schedule 13G form, Stephen Mandel’s Lone Pine Capital owns 6.34 million shares in Charter Communications Inc. (NASDAQ:CHTR), which represent 5.7% of the company’s outstanding common stock. Subsequently, the hedge fund increased its position in Charter Communications by 3.01 million shares since its most recently-filed 13F with the SEC.
Lone Pine Capital LLC, named for a fabled Dartmouth College pine tree that survived an 1887 lightning strike, is a long/short hedge fund founded by Tiger Cub Stephen Mandel in 1997. The Greenwich-based hedge fund employs thorough fundamental analysis accompanied by a bottom-up stock picking approach. Lone Pine Capital, which was launched with $8 million in capital, currently has $23 billion in assets under management and is among the largest hedge funds in the world. Stephen Mandel had acted as a Senior Managing Director and Consumer Analyst at Tiger Management Corporation prior to launching his own shop in 1997. Furthermore, he also worked as a Mass-Market Retailing Analyst at Goldman Sachs Group and as a Senior Consultant at Mars and Company. Mandel is considered to be one of the most successful of the Tiger Cubs who left the legendary Tiger Management, helmed by Julian Robertson, to start their own funds. Stephen Mandel’s fund has outpaced the S&P 500 index by over 20% since its inception. According to its most recent 13F filing, Lone Pine Capital manages a public equity portfolio of $26.42 billion as of March 31, 2015.
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Charter Communications Inc. (NASDAQ:CHTR) is a leading broadband communications company and is the fourth-largest cable operator in the United States, providing services to over 5.9 million customers in 29 states. The shares of Charter have increased by over 11% year-to-date and might keep rising in the upcoming months. On May 26, Charter Communication announced that it had struck a $55 billion cash-and-stock deal for Time Warner Cable Inc (NYSE:TWC). The shareholders of Time Warner Cable will receive $195.71 per share, which represents a mere 14% premium on the stock’s closing price on May 22. In turn, Charter Communications will pay out $100 in cash, while the remainder will be given in shares of the new public parent company called “New Charter”, for each outstanding share of Time Warner Cable. Moreover, in addition to spending approximately $78.7 billion to purchase Time Warner Cable, Charter is also set to buy Bright House for $10.4 billion. The combined cable giant will have more than 23 million customers upon the completion of the deals, right behind Comcast Corporation (NASDAQ:CMCSA), which has 27 million customers.
Now the question is whether the Federal Communications Commission and the Department of Justice will be clearing the deal. It is worth mentioning that the aforementioned deal comes after Comcast walked away from its planned $45.2 billion merger with Time Warner Cable as a result of serious opposition from regulators (there were concerns that the size of the new company would be anti-competitive). However, the Charter-Time Warner Cable deal is expected to withstand regulatory review, as the combined cable company will still be smaller than Comcast. Even more to that, Netflix (NASDAQ:NFLX), which was an insistent opponent of the Comcast-Time Warner Cable merger, now supports Charter in its acquisition proposal for Time Warner Cable. Thus, it is highly likely that the deal will get the approval of the FCC and the Department of Justice, and will be finalized by the end of the current year.
Let’s take a quick look at Charter’s recent financial performance in order to assess how the company has been doing so far this year. The fourth-largest cable operator reported revenues of $2.4 billion for the first quarter of 2015, which yields a growth of 7.3% year-over-year, primarily driven by residential revenue growth and commercial revenue growth. Precisely, the residential revenue growth reached 6.7%, while the commercial revenue growth was at 14.8%. At the same time, the company’s residential customer relationships increased by 86,000 during the quarter, compared to 112,000 during the same quarter a year ago. Meanwhile, Charter Communications delivered a net loss of $81 million in the first quarter of this year, compared to $37 million reported in the first quarter of 2014. Within our database, John H. Scully’s SPO Advisory Corp and Warren Buffett’s Berkshire Hathaway represent the largest shareholders in Charter Communications Inc. (NASDAQ:CHTR), holding 6.47 million and 5.98 million shares, respectively as of March 31.
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