Longleaf Partners Small-Cap: “Viasat (VSAT) Was a Top Detractor This Year”

Longleaf Partners Small-Cap Fund, an independent investment management firm, published its fourth quarter 2020  investor letter – a copy of which can be downloaded here. A return of 17.56% was recorded by the fund in the fourth quarter of 2020, below its Russell 2000 benchmark that delivered a 31.37% return in the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Longleaf Partners Small-Cap Fund, in their Q4 2020 investor letter, mentioned Viasat, Inc. (NASDAQ: VSAT) and emphasized their views on the company. Viasat, Inc. is a Carlsbad, California-based communications company that currently has a $3.4 billion market capitalization. Since the beginning of the year, VSAT delivered a 52.07% return, and as of March 26, 2021, the stock closed at $49.65 per share.

Here is what Longleaf Partners Small-Cap Fund has to say about Viasat, Inc. in their Q4 2020 investor letter:

“ViaSat (-50%, -2.29%; –, –), the satellite communications company, was also a top detractor this year. We exited our position in September at a moderate loss, but a longer-term opportunity cost after six years of ownership. Over the course of our holding, ViaSat shrunk its residential subscriber churn and raised prices, as we had originally believed they would. Its government business grew revenues and profits strongly, and ViaSat Inflight signed up over 2000 airplanes. But the company will not produce positive FCF for several more years due to the ongoing investment demands of its next-gen satellites and other capital allocation decisions. Hard to quantify threats from new entrants have emerged from the likes of a still questionable but now well-funded SpaceX and a farther-off Amazon constellation. We have also disagreed with management on certain items over our holding period. There is a wide range of outcomes from here for the business, but we felt we could deploy the capital elsewhere with less risk.”

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Our calculations show that Viasat, Inc. (NASDAQ: VSAT) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Viasat, Inc. was in 27 hedge fund portfolios, compared to 30 funds in the third quarter. VSAT delivered a 48.52% return in the past 3 months.