Seth Klarman (Trades, Portfolio)’s portfolio of 31 stocks lists only those based in the U.S. or that trade in the U.S., but his multifaceted hedge fund The Baupost Group invests in a variety of situations, including British media and telecom company Sky Plc (LSE:SKY, Financial).
With 78.8 million shares, Klarman’s Boston-based firm is the third-largest holder of Sky. Klarman started the stake in the third quarter of 2017 with 36.8 million shares at an average price of 9.36 British pounds. At Sky’s closing price of 15.45 pounds, near a 10-year high, Klarman has a gain on the stock of somewhere around 65%.
Sky is Europe’s largest entertainment company, reaching 22.5 million customers in five countries in Europe, with 12.9 billion pounds of revenue.
In recent months, Sky has been the subject of a bidding war between Comcast Corp. (CMCSA, Financial) and Rupert Murdoch-owned 21st Century Fox, which owns a 39.1% stake. On Thursday, the British government officially allowed Murdoch’s company to purchase the remaining 61% of Sky for 24.5 billion pounds, or 14 pounds per share. Comcast issued a counter offer of 26 billion pounds, or 14.75 pounds, hours later.
Shareholders still have to decide whether to accept either bid.
The war has only helped Klarman’s investment, as shares jumped 2.6% on the fresh bids Thursday to end the week up 5.2%.
Klarman also owns Sky’s would-be suitor, Twenty-First Century Fox Inc. (FOX, Financial)(FOXA, Financial), with an $87.84 million stake in its A-shares and $87.78 million in its ordinary shares. The price of both stocks has advanced some 38% year to date.
Over the past five years, Sky Plc has grown revenue at a rate of 14.6% and book value at 38.2%. Its earnings per share have declined at a rate of 6.2%.
The company has a price-earnings ratio of 32.87, ranked lower than 87% of the companies in the Global Pay-TV industry. Klarman acquired the stock with a price-earnings ratio around 23. Its price-book ratio at 6.59 is ranked lower than 83% of the companies in the industry, while Klarman’s book value was around 4.
The trailing 12-month dividend yield of Sky Plc is 0.85%. The forward dividend yield of Sky Plc is 0.85%. GuruFocus rated Sky Plc the business predictability rank of 3-star.
