The Gabelli Dividend Growth Fund, a series of Gabelli Equity Series Funds, Inc. on EchoStar Corporation
Thesis
Gabelli estimates that roughly half of EchoStar's value is tied to its approximately 2% ownership interest in SpaceX, which the fund believes is heavily discounted in EchoStar's share price. EchoStar weakened even as SpaceX completed its IPO and reached a roughly $2 trillion valuation, creating a valuation disconnect the manager expects to close over time. The thesis is therefore principally a sum-of-the-parts opportunity in which recognition of the SpaceX stake could surface value.
“However, EchoStar sold off even as SpaceX completed its IPO and quickly reached a $2 trillion valuation, a disconnect we expect to resolve with time.”
Key risks
- The discount attributed to the SpaceX stake may persist
- A decline in SpaceX's valuation would reduce the value of EchoStar's stake