GCI Liberty: Thoughts!

I have been looking at various securities this weekend to work on what is finally turning out to be an idea-rich environment. GCI Liberty, the sole cable provider in Alaska, was an interesting company to look at given that it belongs to the Malone complex. Amongst the dozens of securities and tracking stocks that the Liberty empire has, GLIBP (GCI Liberty Preferred) and GLIBA (GCI Liberty Common A) are two such securities.

GCI Liberty has always traded at a discount to the underlying Liberty broadband and Charter shares. I wanted to do a quick back of the envelope NAV calculation to see the level of discount and whether it would interest me among all the other opportunities on hand. Unfortunately, the discount using a fairly conservative approach turned out to be close to 20% and not much higher that I was expecting. Please note that the below NAV calculation aims to capture only the key components and is a rough guesstimate of the NAV.

Screenshot 2020-03-23 at 5.12.43 PM

However, the cumulative, non-convertible preferred stock trading at $22.25 with a 7% coupon (payable in 4 quarterly payments) with a $25 liquidation value callable after 2021 with a yield of 8.71% is mildly more interesting play with the common equity providing the cushion required for the dividend payments.

Update: To reflect the cash on the balance sheet. Thanks to Rocco for pointing it out.

What are we reading?

  1. You got a free internet upgrade and then your bill went up (here)
  2. Interesting q2 investment commentary from horizon kinetics (here)
  3. Interview with Liberty Media founder and John Malone partner, Peter Burton (here)
  4. A dozen things I have learnt from John Malone (here)
  5. PershingSquare Holdings buys Berkshire Hathaway – Page 10 (here)
  6. Netflix’s content budget seems greater than it seems (here) (Worthwhile to read the entire series)
  7. How I spotted a fraud before it was too late (here)