Should You Hold Cable One (CABO) for its Incredible Upside Opportunity?
Atai Capital, an investment management firm, recently released its first-ever quarterly investor letter. A copy of the same can be downloaded here. In the first quarter of 2023, the fund returned 4.39% net of all fees compared to a 7.50% return for the S&P500 Index and a 2.70% return for the Russell 2000 Index. In addition, you can check the top 5 holdings of the fund to know its best picks in 2023.
Atai Capital highlighted stocks Cable One, Inc. (NYSE:CABO) in the first quarter 2023 investor letter. Headquartered in Phoenix, Arizona, Cable One, Inc. (NYSE:CABO) is a data, video, and voice services provider. On April 14, 2023, Cable One, Inc. (NYSE:CABO) stock closed at $688.02 per share. One-month return of Cable One, Inc. (NYSE:CABO) was 7.47%, and its shares lost 50.19% of their value over the last 52 weeks. Cable One, Inc. (NYSE:CABO) has a market capitalization of $3.921 billion.
Atai Capital made the following comment about Cable One, Inc. (NYSE:CABO) in its Q1 2023 investor letter:
“Cable One, Inc. (NYSE:CABO is a rural broadband provider with the majority of their footprint consisting of Coaxial rather than Fiber. For those unfamiliar with Cable One (Sparklight Internet), you can compare them to their larger, more well-known peers like Charter (Spectrum) or Comcast (Xfinity).
There are however some important distinctions to make; unlike Charter and Comcast, they started to pivot away from TV subs back in 2013, and thus, their EBITDA margins are higher than the rest of the industry (~53% for CABO versus ~40% for Charter). This is because TV subs are basically a zero-margin business and contributed only ~25% of residential revenue for Cable One in 2022 but ~42% for Charter (lower margin, but still profitable for Charter). Funnily enough, I have been shocked at how often cable bears bring up TV subs as a concern on these names, not realizing they contribute nothing to the bottom line and are just a drag on margins. Another contributing factor to Cable One’s higher margins is their industry leading ARPUs (Average revenue per user), which should continue to grow moving forward…” (Please click here to read the full text)
Photo by Mika Baumeister on Unsplash
Cable One, Inc. (NYSE:CABO) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 27 hedge fund portfolios held Cable One, Inc. (NYSE:CABO) at the end of the fourth quarter which was 22 in the previous quarter.
We discussed Cable One, Inc. (NYSE:CABO) in another article and shared Artisan Value Income Fund's views on the company. In addition, please check out our hedge fund investor letters Q1 2023 page for more investor letters from hedge funds and other leading investors.
Suggested Articles:
Disclosure: None. This article is originally published at Insider Monkey.
