Conventum - Alluvium Global Fund on Liberty Capital, Inc.
Thesis
Alluvium increased its Liberty Capital position after the stock fell to roughly half of the fund's valuation estimate. The fund views the acquisition of Quintillion as strategically complementary to GCI Alaska, with meaningful expected synergies and an estimated valuation uplift of about 35% in its model. Management's retreat from the competitive, low-margin video business also improves the business mix. CEO share purchases reinforced the fund's willingness to add despite the market's concerns.
“With the share price falling (to levels approximating half our valuation), and encouraged by its CEO buying shares, we increased our position”
Key risks
- Competitive headwinds in cable and connectivity
- Capital intensity of the underlying network business
- Failure of the planned Liberty Latin America transaction may have weakened investor confidence