Atai Capital Management Sold Cable One (CABO), Recognizing the Mistake

Atai Capital Management, an investment management firm, recently released its second-quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund returned 32.8% in the second quarter, net of all fees, bringing the YTD returns to 29.4% net of all fees. This is compared to a 10.9% total return for the S&P 500, an 8.5% total return for the Russell 2000, and a 15.5% total return for the Russell Microcap for the quarter and 6.2%, -1.8% and -1.1%, respectively, for YTD. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its second-quarter 2025 investor letter, Atai Capital Management highlighted stocks such as Cable One, Inc. (NYSE:CABO). Cable One, Inc. (NYSE:CABO) is a US-based data, video, and voice services provider. The one-month return of Cable One, Inc. (NYSE:CABO) was 9.75%, and its shares lost 56.71% of their value over the last 52 weeks.  On August 15, 2025, Cable One, Inc. (NYSE:CABO) stock closed at $153.99 per share, with a market capitalization of $866.8089 million.

Atai Capital Management stated the following regarding Cable One, Inc. (NYSE:CABO) in its second quarter 2025 investor letter:

“I first wrote about Cable One, Inc. (NYSE:CABO) in our Q1 2023 letter, nearly three years ago. I won’t rehash the full thesis here and would point you to that letter for more detail, but at a high level, we invested in Cable One under the belief that its rural Hybrid Fiber-Coaxial (HFC) network would remain defensible against both fiber overbuilders, such as AT&T, and fixed wireless access (FWA) providers like T-Mobile, enabling Cable One to continue subscriber, revenue, and EBITDA growth (even if at a slower pace).

However, over the following two and a half years, that thesis unraveled. Cable One’s HFC network went from roughly 30% overbuilt (which mainly was the large population centers of their footprint) to more than 60%, so in short, we were wrong. It turned out that Cable One had pushed ARPUs high enough that it became economically viable for AT&T, Lumen, and others to overbuild their more rural markets. The footprint that we initially viewed as a strength turned out to be a double-edged sword for the company: while it had enabled ARPUs well above industry peers for many years due to limited competition it is now significantly overbuilt and Cable One is being forced to compete against non-powered fiber lines (which are cheaper to maintain and a superior product), and whose providers can and have been undercutting them on price…” (Click here to read the full text)

In another article, we covered Cable One, Inc. (NYSE:CABO) and shared The London Company Small Cap Strategy’s views on the company. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.