Billionaire Ken Griffin Sets His TiVo Stake for 5.2%

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Citadel Investment Group, managed by billionaire Ken Griffin, has reported a position of 6.6 million shares in TiVo Inc. (NASDAQ:TIVO). This gives the fund 5.2% of the total shares outstanding. The company has reported almost 3 million subscribers to its DVR service, which allows consumers who receive digital cable from providers such as Comcast Corporation (NASDAQ:CMCSA) or to record shows as well as to discover new entertainment options; TiVo also provides audience data to channels and advertisers. According to Citadel’s 13F from the end of September, the fund had owned just over 1 million shares, so nearly all of its current stake has been bought in the last three and a half months. Check out more of Griffin’s stock picks.

In the third quarter of TiVo’s fiscal year (the quarter ending October 2012), the company grew its revenues by 27% compared to the same period in the previous fiscal year. Somewhat slower growth in services was augmented by impressive growth rates in technology and hardware. Gross profits were up 34% as margins increased. Because of R&D as well as SGA expenses, TiVo Inc. was only profitable because of (presumably one-time) litigation proceeds as a result of the company’s ongoing patent lawsuits with companies such as AT&T Inc. (NYSE:T). If we strip out R&D costs as an investment- a common though not exactly conservative way to analyze a technology company- then the company had $10 million in operating income as opposed to $4 million a year earlier.

CITADEL INVESTMENT GROUPHowever, even a $10 million quarterly income rate- before R&D and taxes- is not exactly high for a stock with a $1.5 billion market cap (and $1 billion enterprise value, as TiVo Inc. has a substantial cash position). Wall Street analysts expect the company to be unprofitable on a forward basis, for the fiscal year ending January 2014. The most recent data shows that 12% of the outstanding shares are held short, so while we know that Griffin is long it is clear that a number of traders believe that TiVo is overvalued. We’d also note that the stock has a very high beta of 2.8, particularly for a company whose cash position is such a large share of its valuation.

What other notable investors are owners of TiVo stock?

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