I haven't (yet) delved deeply into all of DISH's moving parts but know enough to be confused by the ramp this morning on high volume. Anyone have at least a semi-literate guess for the ~8% rise in 2.5 trading sessions?
I checked consensus forward multiples on Bloomberg, and both the P/E and EV / EBITDA multiples are now at or above the May 2008 peaks. As widely tracked as DISH is, I doubt consensus numbers are egregiously off... which makes the multiple expansion a head-scratcher.
"Clearwire shares are up 37 cents, or 16%, at $2.68, and rose as high as $2.96, clearly anticipating some benefit, if not now then down the road. Given the emphasis placed by both Sprint and Softbank on rolling out faster 4G wireless service, of the “long term evolution,” or LTE, variety, it would seem Clearwire’s network and spectrum might be important to the two. Sprint has already committed to paying Clearwire hundreds of millions of dollars for future LTE services, as noted in Clearwire’s most recent 10-K."
Dish is a big holder of Clearwire debt , not to mention the spectrum Dish holds.
Of the 11 debt issuances Bloomberg has listed for Clearwire, only three were trading meaningfully higher a bit earlier today when DISH equity was up 4%:
1. $2,027M of 12% Dec. 2015 bonds +6.250 to 105.750
2. $730M of 8.25% Dec. 2040 convertibles +4.681 to 99.095
3. $500M of 12% Dec. 2017 bonds +6.000 to 114.188
The problem is that even if DISH owned 100% of the $3.3B in debt cited above, the principal gain this morning would have been only about $191M, whereas the earlier 4% pop created an additional $605M in market capitalization.
Even if it is assumed that $200M of the $605M gain were attributable to beta (e.g., from above-consensus consumer spend numbers this morning), you'd still be shy by over $200M. I checked the holders of the three mentioned debt issuances, and they appear fairly widely held. DISH definitely does not own 100% of the paper, so the gap is much larger than $200M.
The debt holdings may be helping DISH equity, but it seems like only a small part of the story. Something else is going on.
Also.. checked Morgan Stanley's research, and their base case target is $35 per share, which assumes after-tax spectrum value of $3.8B. They peg the upside spectrum value at $7.6B, or another $9 per share on top of the $35.
My best guesstimate at this point is one or more institutional guys believe a spectrum sale is in the offing at an above-market price. The question I'm now asking myself is how much additional upside this stock has in the near-term.