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CenturyLink, Inc. (CTL): Longleaf Partners Fund Supports Jeff Storey

Nina Zdinjak

Aside from reporting its quarterly return of 11.88% in its Q1 2019 Investor Letter, Longleaf Partners Fund also posted short comments on several companies in its portfolio. Among those stocks was CenturyLink, Inc. (NYSE:CTL), which happens to be the biggest detractor to its Q1 2019 returns. If you are interested you can track down a copy of the fund's newest investor letter here, while in this article we bring you only the comments on CenturyLink.

Contributors/Detractors
(Q1Investment return; Q1 Fund contribution)

CenturyLink (-19%,-1.72%), the fiber and telecom company, was the primary detractor to first quarter returns after a dividend cut. We were disappointed by that decision and filed a 13-D to enable us to become more active in the investment through seeking to improve the board, encouraging opportunistic asset sales and exploring creating tracking stocks for the company’s two segments. Private-market transactions of assets comparable to some of CenturyLink’s (CTL) fiber assets have been over 15X EBITDA, far above CTL’s depressed 5X EBITDA stock price. In addition to monetizing some of this fiber, separating the enterprise and consumer segments into distinct tracking stocks could help highlight the values and different opportunity sets for both. We believe that adding board members with experience in fiber and financial transactions can bring additional capital allocation discipline to drive value recognition. We maintain our support for Jeff Storey and his team operationally even while disagreeing about some capital allocation items. Storey bought $1 million in shares personally in the quarter, and CFO Neel Dev, as well as multiple directors, also increased their ownership of the stock.

[caption id="attachment_523267" align="aligncenter" width="750"] Dishes, Networks, Communications Copyright: bluebay / 123RF Stock Photo[/caption]

CenturyLink is a Monroe, Louisiana-based telecommunications company that provides its professional services across 37 states. Over the past 12 months, the company's stock lost 39.52%, having a closing price on April 25th of $11.43.

At Q4's end, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 29% from one quarter earlier. On the other hand, there were a total of 25 hedge funds with a bullish position in CTL a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Southeastern Asset Management, managed by Mason Hawkins, holds the largest position in CenturyLink, Inc. (NYSE:CTL). Southeastern Asset Management has a $975 million position in the stock, comprising 13.9% of its 13F portfolio. The second most bullish fund manager is Israel Englander of Millennium Management, with a $87.3 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining professional money managers that are bullish include Ken Griffin's Citadel Investment Group, Prem Watsa's Fairfax Financial Holdings and Joel Greenblatt's Gotham Asset Management.

CTL

Disclosure: None.

This article is originally published at Insider Monkey.