LBTYB - Liberty Global: The Sunrise Spinoff Should Unlock Value
2024-04-03 08:49:43 ET
Summary
- Management claims a large discrepancy between the value of their assets of $48 a share and the share price of $16.7.
- Liberty Global releases 4Q2023 results, announcing a plan for Swiss Sunrise spin-off, which should bring $7.7 - $13.7 per share value to shareholders.
- The share price of Liberty Global has halved since 2017 despite large share buybacks of 60%. Liberty Global will continue its share buyback with 10% for this year.
- While there are issues, I claim that $16.7 a share is misvalued and assess a Strong Buy as a great value opportunity for patient investors.
Investment Thesis
Liberty Global ( LBTYA ) ( LBTYB ) ( LBTYK ), a European leader in broadband, video, and mobile communication, has reduced its share count by more than 60% since 2017. Despite this reduction, the share price is down substantially, with management claiming the largest-ever value gap in their stock.
While standard valuation metrics like EV/EBITDA do not point to undervaluation compared to peers, the unique corporate structure offers a different approach to value the company on a sum-of-parts basis, which points to a significant discount in value.
The company is running a leveraged buyback strategy, which, despite unfavorable macro conditions, should yield a significant upside in the stock if the management plays its cards correctly....
Liberty Global: The Sunrise Spinoff Should Unlock Value