OGG me old mate ..you are correct ...but are you easily seduced by slick presentations with glossy slides
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The point isn't that they have 1m customers. It's that the narrative that their business is in decline is false. The doomsayers are wrong.
With BlockBuster Video it was obvious. You could clearly see a massive decline and exodus of foot traffic in their stores.
With Sky, what we saw is a small decline, then a flatting of the curve. The total customer numbers are still hovering at around the all time high level.
However, the stock price has gone from $6 to 19 cents. Why?
Customers are no longer prepared to pay the $90+ for a sports package,so that price has been reduced,maybe they have the same number of subscribers.but they are paying less.Also with increased competition they were forced to pay more for their product,so yes they are being squeezed both ends.
Also the debt has to be serviced, their deal with Optus runs out next year,how is the $200m deal to renew going to work?
Perhaps Sky should be looking to merge with TV3 and NZME they are both struggling,but together the cost savings and improved content could be a winner all round.TV3 are providing Sky with their news coverage which is a huge cost to try and provide a quality news production from around the world.
Don,t forget their outside broadcast is one of the best in the world.
I don’t speak Skylingo so don’t know about customers but they use a thing called subscribers
When the share price was $6 in 2015 they had 851k subscribers and that subscriber base generated $283m operating cash flow,
Since then they have invested $341m (investing for growth seems a term they use often)
After that investment subscriber base was 779k (june19) and operating cash flow was only $178m
Subscriber numbers increasing over 2020 but operating cash likely to be significantly(?) less than 2019
I’m trying hard to fall in love with Sky but the trend in subscribers and cash still not looking good ...esp in light of the significant ongoing capex and investment
The average revenue per user has dropped, but only slightly.
How does this justify a 96% loss in the capital of the stock over the last few years?
Also, there's almost 40,000 new dwellings consented each year. So over the next 10 years there could be another 400,000 potential Sky customers.
Even if customer numbers stayed the same, over the long term you would be getting 25% dividends at these prices.
Well the accounting of it is dealt with differently under IFRS16...
But ultimately it will be paid the same way it has always been paid for? From operating earnings?
Like...you realise they don’t have to pay the full amount upfront right? In a little confused by your question.
I wouldn't worry to much about the cash flow. What matters is these numbers:
851k: 2015
779k: 2019
A small 8.5% decline. The share price therefore should be $5.65 given these numbers.
I think this is why Black Crane have such a strong interest in this stock. The fundamentals are there (subscriber numbers) but the cash flow has decline, likely because of miss-management or other external factors over the last few years.
If Black Crane can scoop up the rest of the shares and then transform the company, they might be able to turn the "cash flow tap" back on to what it was before the decline.
From reading their website Black Crane are investors, not company managers. More likely to look for a buyer once/if they take control of SKY?Quote:
If Black Crane can scoop up the rest of the shares and then transform the company, they might be able to turn the "cash flow tap" back on to what it was before the decline.
I did some more research on them.
It looks like they have a new website that is in test mode but you can still view it, just lol. Just type in the IP address instead of the domain name.
http://142.93.43.240/
Here is their fund fact sheet:
http://142.93.43.240/uploads/2020/02...ctsheet-v3.pdf
Also found an unlisted youtube video of him from 2017.
https://www.youtube.com/watch?v=u26nP7JUpDI
I dunno what he's up to but from what I've read he's basically an event driven investor.
https://en.wikipedia.org/wiki/Event-driven_investing
...a hedge fund investment strategy that seeks to exploit pricing inefficiencies that may occur before or after a corporate event, such as an earnings call, bankruptcy, merger, acquisition, or spinoff...
Their average fund size investment is $10m-$50m. So I assume he's still got some ammunition left and will continue buying Sky shares, especially considering their average is 35c and the stock is trading at 27c. He'll probably keep buying and then hope an "event" happens in the short term.
So in other words, he's just a punter like me but with deeper pockets :eek2:
He could buy up to 19.99% of the company if he wanted to for about $26M total spend at current prices.
One can only speculate on how big a stake he will purchase and what he is going to do... but he may use his experience and connections to help Sky refinance their debt facilities on more favourable terms as a first step.
Ultimately he will want to find a buyer for the company by the looks of things.
I like his consolidated portfolio approach...very Charlie Munger. Go in big for a small set of high conviction stocks that you really understand.
Let's see if Black Crane's interest in the company triggers interest from any of the other Big Boys.
I see that that Black Crane guy used to be with UBS ...must have had a chat with his old mates as they buying as well.
I think it is more than a ‘punt’ actually.
His investment style is to consolidate on high conviction stocks. So he researched the sh1t out of them before he starts buying in.
He also takes an active investment style - i.e once he takes control of a large block of shares he rolls his sleeves up and works with the board to make the changes he feels are needed.
We can’t know what his end game is here - but I don’t get the feeling that he has bought Sky as a ‘punt’ just because it is statistically cheap.