Why is Highbridge Capital Upping Its Stake in This Tech Company?

HIGHBRIDGE CAPITAL MANAGEMENTIn a 13G filing last week, billionaire fund manager Glenn Russell Dubin of Highbridge Capital Management announced that his firm now had a 5.15% ownership stake in Echostar Corporation (NASDAQ:SATS), buying over 400,000 shares. Dubin co-founded Highbridge in 1992 with childhood friend Henry Swieca. In 2004, they sold a majority stake in the firm to JPMorgan Chase for $1.3 billion, and the firm has around $29 billion AUM.

At the end of 2Q, Highbridge owned 1.6 million shares of Echostar. The firm’s new stake is a 25% increase. With this purchase Highbridge overtakes Kensico Capital as the top shareholder of funds we track. Kensico owned 1.9 million shares as of the end of 2Q. Other notable managers owning the stock are Jim Simons and George Soros. Check out all the funds owning Echostar here.

The company is up over 40% year to date, but is relatively flat since February. However, the company is up almost 4% this week alone on the news that DISH Network Corp. (NASDAQ:DISH) will use one of Echostar’s satellites to offer its satellite-based broadband service to the rural U.S. market starting in October. Echostar is in the business of providing set-top boxes and related products for satellite television providers and is closely affiliated with DISH—owning and maintaining all of the company’s satellites.

DISH is the second largest satellite TV operator in the U.S., and will become the first to provide satellite net services in rural areas. DISH’s key rival, DIRECTV (NASDAQ:DTV), plans to launch similar services in 2013. DISH is already providing satellite Internet service using the network of ViaSat Inc. (NASDAQ:VSAT) in certain parts of the U.S. particularly in the West Coast. Both the existing and new services will be offered under the dishNET brand. The FCC estimates that some 14.5 million rural people do not have access to high speed Internet.

George Soros and Jim Simons are both invested in DISH, in addition to Echostar. However, DISH’s competitor DIRECTV has one of the heaviest hitters in its corner when it comes to top fund managers—Warren Buffett—find out why Buffett is a DIRECTV subscriber. In addition to the Oracle of Omaha, Mason Hawkins has over 6% of his firm in DIRECTV.

ViaSat had another big announcement last month by saying that its Internet brand, Exede Internet, was expanding to serve commercial airlines. This will allow airlines to offer high-speed service to each passenger, versus an aggregate bandwidth that all passengers compete for. However, the stock is still flat over the past month, as EPS have missed estimates by at least 50% the last two quarters and full year 2012 is expected to be down over 100% from 2011. Most notable for ViaSat is that big-time investor Seth Klarman has over 10% of his firm’s, Baupost Group, 13F portfolio invested in the company.

Other notable competitor to Echostar and the satellite providers is TiVo Inc. (NASDAQ:TIVO). TiVo provides the services for accessing content across sources, such as linear television, on-demand TV and broadband video—namely through set-top boxes including DVRs—find out why Steven Cohen is building a position in TiVo. TiVo has seen its stock rally from a mid-summer slump after the company announced an acquisition of TRA, Inc. for $20 million.

As far as Echostar is concerned, the company should be considered a speculative play, trading at a trailing P/E of 20, but a forward P/E of 40. The satellite industry is ripe with indirect competitors, and as a result Echostar is only expected to grow EPS at a 5% CAGR over the next half-decade. The competition looks to only be getting stronger as Netflix expands and Amazon takes a serious look at the industry. We also do not like Echostar’s continued overexposure to DISH since breaking from the company in 2008. There is too much uncertainty in the satellite and streaming content market for us to get as excited as Highbridge is about the company.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months Click to see monthly returns in table format!

Lists

The 10 Healthiest Fast Food Chains in America to Dine At

The 5 Most Expensive Cat Food Brands You Can Spoil Your Kitty With

The 6 Best eCommerce Platforms for Small Businesses

The 10 Worst Mistakes an Entrepreneur Can Make

The 5 Most OP Characters in League of Legends to Carry Games and Crush Foes With

The 5 Best Foods to Eat Before Running that Will Help You Pound the Pavement

10 Glaring Plot Holes in The Walking Dead that a Zombie-Filled Bus Could Drive Through

The 5 Biggest Celebrity Stoners Who Love Their Reefer

The 10 Most Overrated Movies Of All Time by Out-of-Touch Critics

Top 6 Least Expensive Cruise Destinations For 2015 that Will Take You to Paradise

10 States with Lowest Substance Abuse Rates in America

The 14 Most Watched TV Finales Ever

The 10 Best Selling Role Playing Games of All Time for PC

10 Most Influential Papers In Economics

Top 8 Biggest Charities in the US

10 Worst Celebrity Career Moves Ever

Top 10 Best Paid Tennis Stars in the World

10 Cities with High Demand for Nurses

6 of the Worst Greeting Card Messages Ever Crafted

How to Make Money in ArcheAge and Build Your Empire

10 Foods To Eat To Lower Cholesterol Levels

The 10 Most Hated Television Characters of All Time

The 30 Worst Halloween Costume Ideas Ever Brought to Horrible Life

10 Vocational Skills in Demand Today with Jobs Waiting to be Filled

10 Best Places to Visit in Central and South America

The 10 Greatest Empires in History Which Nearly Conquered the World

The 6 Cheapest Boarding Schools In America 2015

5 Clear Reasons LoL is Better than DotA, Continues to Rule MOBAs

The Only 9 Teams with a Chance to Win the Super Bowl

The 15 Most Common Phobias in America that Induce Fits of Panic

Top 6 Least Expensive Tourist Destinations in 2014

Jim Goetz, Peter Fenton, Jim Breyer: Top 6 Venture Investors for 2014

Top 15 Billionaires in 2014

5 Pitfalls To Avoid When Buying a Franchise

Top 20 Medical Schools in the US – 2014 Rankings

4 Business Strategies that Turned Jamie Oliver into the World’s Richest Chef

6 Qualities That Make You A Good Team Player

10 High Paying Seasonal Jobs in America this Holiday Season

The 10 Busiest Shipping Lanes in the World

5 Most Valuable Brands in China

The 10 States with Highest Substance Abuse Rates Crippling Their Populace

The Top 10 Things to Do Before You Die That Will Echo for Eternity

The 10 Best Selling Items on Etsy

Top 10 Things to Do in Tokyo, the Greatest City in the World

10 Mistakes on Social Media that Can Harm You and Will Probably Get You Canned

The 10 Best Cities to Find Jobs in 2014

The 10 Most Controversial Songs Of All Time to Hit (and get Banned from) the Airwaves

The 20 Biggest IPOs in US History

The 10 Best Places to Visit in Mexico that Are Beautiful and Safe

7 Bad Habits that Age You Beyond Your Years

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!