According to Real-Time Picks, a Premium feature of GuruFocus based on 13D filings, Chase Coleman (Trades, Portfolio)’s Tiger Global Management reported a new common stock holding worth 21,437,616 shares in Starry Group Holdings Inc. (STRY, Financial) on March 29. The holding represents 12.89% of Starry’s shares outstanding.
The fixed wireless broadband internet service provider went public for the first time via special purpose acquisition company FirstMark Horizon Acquisition Corp. (FMAC, Financial) on the same day Coleman’s firm acquired its stake.
On the day of the IPO, shares closed at $9.21 apiece. As of April 7, the stock had fallen 12% to trade around $8.05.
About Starry
Headquartered in Boston, Starry uses millimeter-band LMDS connections, or 5G fixed wireless, to connect its base stations to customer buildings and provide internet service. It is structured as a holding company, operating through its subsidiaries.
Chet Kanojia, co-founder and CEO of Starry, described the company’s mission as follows in the public listing announcement:
“Starry was founded with a singular mission: to transform how broadband networks were built so that we could meaningfully improve people’s lives with faster, better, more affordable internet access."
Growth strategy
So far, Starry has successfully deployed its gigabit network in six U.S. cities: Boston, New York City, Los Angeles, Washington D.C., Denver and Columbus, Ohio.
The company’s growth plan is to offer “a superior internet service that is fast, reliable, uncapped and competitively-priced, while also working to improve digital access and equity.”
With a $50 per month 200 Mbps plan that has no data cap, it is more attractively priced compared to plans provided by AT&T (T, Financial) and Charter Communications’ (CHTR, Financial) Spectrum, which are the main heavy hitters in the U.S. residential internet service market.
Given the value of Starry’s offerings from the customer’s perspective, if it can continue expanding to more cities without incurring the kinds of costs that would necessitate raising the prices of its plans too much, it seems possible that it could swiftly snap up market share.
The main hurdle the company needs to get past in order to be successful is ensuring the quality of its internet service can match or exceed competitors. Right now, while some customers are very happy with their internet speeds, other customers complain that their internet slows down or fails entirely during busy times of the day, especially in densely populated areas.
Most customers would gladly pay an extra $10 to $20 per month for a competitor with a more reliable internet connection. This is a problem that could be solved by scaling up in accordance with usage density, so as Starry grows, it should be able to offer quality on par with other internet providers even in high-usage cases.
Portfolio overview
As per the most recent SEC filings, Tiger Global Management’s equity portfolio consisted of 169 stocks valued at a total of $45.94 billion.
Aside from Starry, there aren’t any other telecommunication services stocks in the Tiger Global portfolio, though the firm does have some other holdings in the broader communication services sector, including Spotify Technology (SPOT, Financial), Netflix Inc. (NFLX, Financial) and Roblox Corp. (RBLX, Financial).
Coleman’s firm has allocated more than 50% of its portfolio to tech stocks, as shown in the below chart. Most of its tech investments are in the software industry. The firm has also allocated significant chunks of its portfolio to the consumer cyclical and communication services sectors.
