News Corp (NWSA), Capital One Among Dan Loeb’s Big Selloffs

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Dish Network Corp. (NASDAQ:DISH) lost a total of 165,000 subscribers in 2011 and expects to see a flat subscriber base in 2012 and 2013 at around 14 million. The company’s core TV business is still holding up operations – including its DVR and streaming video segments. A likely drag on Dish is its Blockbuster integration, and acquisitions of DBSD and TerreStar. Dish trades on the high end of the industry at 22x earnings, compared to Time Warner (14x) and Comcast (17x). Interestingly, the sell-side forecasts Dish to experience a 5-year EPS growth rate of only 2% annually.

Capital One Financial Corp. (NYSE:COF) is one of the top-notch credit card companies and was up close to 35% in 2012. Growth in domestic credit card purchase volumes has been positive, but recent acquisitions could be a drag over the interim – including those of the ING Direct and HSBC’s U.S. card portfolio. Although this might bring the card company’s valuation into question, we see the fact that broader economic trends are showing signs of improvement, which will translate into loan loss provisions and charge-offs declining in 2013. Even with the strong performance by Capital One, it still trades at a P/S of only 1.4x, versus Discover at 2.4x and American Express at 1.9x. John Paulson is a big-name investor in Capital One (see John Paulson’s newest picks).

Dan Loeb’s selloffs were in a variety of industries, some of which we believe still have upside potential. Aetna should see positive growth from a steady rise in population. We agree the retail market might be limited, including the market for auto parts. Meanwhile, the valuation for Dish might be overdone and the News Corp breakup might already be baked into the stock. Capital One could still see upside given its strong market position. Here’s some more related coverage:

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News Corp: Why do hedge funds love it?

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