Buy Liberty Media Corporation (LMCA)   4 comments

I previously added Sirius XM (SIRI) based on the underpriced bid for the remaining shares from John Malone’s Liberty Media Corporation (LMCA). But what most people fail to see in this deal is the company on top. LMCA is a disgustingly undervalued stock. Look at the numbers:

Trailing P/E: 2.0
PEG Ratio: 0.4
Price/book: 1.15
Profit margin: 179%
Operating margin: 20%
Quarterly revenue growth (yoy): 620%
Quarterly earnings growth (yoy): -65%
Debt/equity: 20%
Operating cash flow: +$1.2 billion
Levered free cash flow: +2.9 billion

Is it any wonder that Berkshire Hathaway is a shareholder? This stock has “value play” written all over it.

I added a small position at $137.19 this morning, and I wouldn’t mind adding more if it drops.

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Posted January 22, 2014 by edmcgon in Portfolio Moves

4 responses to “Buy Liberty Media Corporation (LMCA)

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  1. Ed

    Thoughts on pvct at these levels

    • Ojunker,
      I would, and here’s why: If they can stay above $5/share, they can uplist to one of the exchanges. When that happens, they can go up even more, at least for the few days after they uplist.

  2. Ed – I have not dug much into Liberty. But I would be extremely careful looking at any trailing figures for them. They have gone through some major restructuring (including spin off of STRZA which I own). I see they earned $68 a share last march, but more normalized earnings past few quarters is like 80 cents.

    • Marshall,
      One other aspect I considered in this deal: I think it’s entirely possible they get Sirius at the rock-bottom offer they made. The only question is whether they raise the bid to make the lawsuits go away, or whether they decide to fight them.

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