Liberty Broadband (NASDAQ: LBRDK): A Bull Case Thesis

We found a bullish thesis on Liberty Broadband Corporation (LBRDK) on ValueInvestorsClub authored by phn19. We often like stock ideas posted on VIC because they are generally written by aspiring analysts who produce quality research. Click here for the full article. Below we summarized the LBRDK bullish thesis.

As a holding company, LBRDK operates and owns interests in a broad range of communications businesses. Its principal assets consist of its interest in Charter Communication (CHTR) and its subsidiaries: Skyhook and GCI. Having delivered services for almost 40 years to some of the most remote communities and very challenging conditions in North America, GCI is Alaska’s largest communications provider. Its services include data, wireless, video, voice, and managed services to consumer and business customers throughout Alaska and nationwide. CHTR is the largest pure-play cable operator and the second largest broadband provider in America.

GCI Liberty (GLIBA) is merging with LBRDK to create tax advantages related to monetization of its public equity stake, reduce overhead expenses thereby simplifying its organizational structure. The consolidation will allow LBRDK to accumulate more shares of  CHTR at a discount to market price, and cancel the LBRDK shares held by GCI. The move will be adding value to GCI shareholders as the it would be a virtual buyback, but without any capital gains taxes on LBRDK. In addition to the merger, LBRDK also announced an expanded buyback program of $1.2 billion from the original $200 million, a smart move to take advantage of the widening discount to NAV.

The company seems to have survived the COVID-19 pandemic largely unscathed with no material impact on its business. The less than $100 million of EBITDA dent in the second quarter out of the $25 billion EBITDA for the year is testament of the company’s resilient earnings power.

Possible widening of the rather very low sell side analyst coverage (only 4 analysts covering) should help the stock gain some attention. While the stock has had a decent run as of 7 September, 2020, reaching $136, the analyst has been bullish with further upside potential. Although he had not given a price target, LBRDK did flirt with $163 area in December, 2020 and has since consolidated in the $145-150 range.

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