Time Warner Cable Inc (TWC), Charter Communications (CHTR): The Cable Consolidation Saga

Meanwhile, Time Warner had 37 hedge funds long the stock at the end of 1Q. The hedge fund with the largest position included Highfields Capital, with a $245 million position, making up 2.2% of its 13F portfolio (see Highfields’ top picks).

Charter Communications, Inc. (NASDAQ:CHTR) has some of the most robust hedge fund interest, with 54 hedge funds long the stock heading into the second quarter, a 29% increase from previous quarter. Fortress Investment Group held the largest position the stock, worth $520 million and comprising 8.9% of its 13F portfolio (see Fortress’ newest picks).

The bottom line

The industry has to do something. The conventional cable business model is being attached from all angles, these include fiber-based TV services of telecom companies and online video streaming services, including, but not limited to, Verizon Communications Inc. (NYSE:VZ), AT&T Inc. (NYSE:T), DISH Network Corp. (NASDAQ:DISH), DIRECTV (NASDAQ:DTV), Netflix, Inc. (NASDAQ:NFLX) and Hulu.

The outcome of the cable consolidation should prove to be an interesting one, but a necessary one nonetheless. I still believe that one of the best ways to play the industry is Time Warner Cable Inc (NYSE:TWC) — the company has one of the best expected five-year EPS growth rates at 12%.

And despite the run up in its shares, the stock is still trading below historical price to earnings standards.

No matter which way the recent rumors shake out, I think the long-term winner will be Time Warner. And it appears that both Charter Communications, Inc. (NASDAQ:CHTR) and Cablevision Systems Corporation (NYSE:CVC) need Time Warner, more than Time Warner needs either of them.

The article The Cable Consolidation Saga originally appeared on Fool.com and is written by Marshall Hargrave.

Marshall Hargrave has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Marshall is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.