Insider Acquires Shares of General Communication

Company is Alaska's largest communications provider by volume

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Oct 13, 2016
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Searchlight Capital Partners purchased 80,000 shares of General Communication (GNCMA, Financial) in two transactions on Oct. 3 and Oct. 5, according to a Form 4Â filing with the Securities and Exchange Commission.

On Oct. 3 the firm purchased 30,000 shares at $13.775 per share. On Oct. 5 Searchlight Capital Partners added 50,000 more shares of General Communication at a price of $14.50 per share.

General Communication is headquartered in Alaska and is currently the largest Alaska-based communications provider as measured by revenue.The company was founded in 1979 and through its subsidiaries provides diversified communications to its arctic clients. General Communication provides wireless communication, Internet and video as well as TV services across Alaska.

General Communication has a vision that it will be able to provide a future in which broadband is available to all communities in the arctic. The company continues to expand its operations with tower construction, fiber trenching, undersea cabling and satellite projects to help make this goal possible.

In the year ending Dec. 31, 2015 the company generated revenue of $978.5 million. It had 227,800 wireless subscribers, 140,000 modem subscribers and 133,300 basic video subscribers.

General Communication has a market cap of $576.73 million, a price-earnings (P/E) ratio of 96.40, an enterprise value of $1.94 billion and a price-book (P/B) ratio of 7.13.

According to GuruFocus General Communication has a 4 of 10 financial strength rating, a cash-debt ratio of 0.01, an interest coverage ratio of 1.26, a Piotroski F-Score of 6 and a Beneish M-Score of -2.74 indicating that it's not a manipulator of its financial statements. The company also has an 8 of 10 profitability and growth rating with an operating margin of 10.97%, an ROE of 17.12%, revenue growth (three years) of 15.20% and EBITDA growth (three years) of 6.60%.

Competition

Searchlight Capital Partners is an investment firm that seeks out opportunities to invest its capital in companies for the long term. However, General Communication competes with national wireless carriers AT&T (T, Financial) and Verizon (VZ, Financial), which have resources that are significantly greater than General Communication's in terms of financing, marketing, human capital and distribution.

This is noteworthy for investors because AT&T and Verizon are ranked 10th and 13th on the Fortune 500 list of most profitable companies in the U.S. The fact that General Communication has tough competition against some of the largest corporations in the U.S. creates potential future obstacles and variance that could affect the company’s market price in the future.

Below is a Peter Lynch chart that shows General Communication is trading above its intrinsic value.

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Disclosure:Â Author does not own any shares of this company.

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