During the First Quarter, we increased our exposure to Liberty Global (LBTYA
), Europe's largest cable operator, following the announcement of its acquisition of Virgin Media (VMED
). The acquisition triggered a wave of investments by arbitrageurs, who created an attractive entry point for us by putting pressure on Liberty Global's shares. Initiating a position in Virgin Media allowed us to purchase additional Liberty Global at a material discount to its pre‐announcement and pro forma trading levels.
Our initial interest in Liberty Global was spurred by multiple catalysts and favorable geographic tailwinds. Relative to the United States cable market, Europe offers materially higher volume growth, lower churn, and meaningful penetration opportunity. Before yearend, we expect catalysts in the stock to include the closing of the VMED deal, the initiation of a substantial buyback plan, and the unveiling of accretive wireless and B2B initiatives. The wireless market in Liberty's key Western European markets generates over $73 billion of annual revenue, presenting Liberty with the opportunity to redefine the MVNO market, leveraging a unique WiFi footprint, full back office and system control, and attractive quad play bundles. Liberty also appears poised to ramp up its B2B efforts, particularly in Germany. Continue Reading »