market folly

We're posting up notes from the Ira Sohn Conference 2013 in New York.  Next up is a summary of the presentation from Keith Meister of Corvex Management (he previously worked with Carl Icahn).  He presented Time Warner Telecom (TWTC) and Level 3 Communications (LVLT) as he likes plays on the data boom.


Long: Time Warner Telecom (TWTC)

Has his own fund, used to work for Carl Icahn. Buys companies going through change, activism. Likes recurring revenue businesses, with secular growth even in no-growth world, consolidating industries. Global data traffic over networks is indisputable, no matter which tablet/ smartphone/game is popular. Networks are consolidating. Ideas: Long TWTC. 80% enterprise/20% wholesale. Possible takeover target. Growing, market share gainer, balance sheet optionality for capital return. Steady organic growth, declining monthly churn. Potential acquirers: Comcast (CMCSA), Verizon (VZ), AT&T (T), Level 3 Communications (LVLT), Cablevision (CVC), Charter Communications (CHTR), or maybe even Google (GOOG). Price target: $34. Meister said he will file a 13D on TWTC as he owns 6% of the company and thinks this is a takeover target.


Long: Level 3 Communications (LVLT)

Long idea: LVLT. 55% ent/45% wholesale. Acquirer of other companies. Scale asset, real estate play, and $8.5B NOLs. It's like Sprint last year- as people begin to believe the story, the stock will work. Expects TWTC to be acquired. Both about $4-5B market cap. Trade at 7-8x EBITDA, which is growing 10% CAGR. LVLT 5.3x debt/EBITDA, TWTC only 1.5x. LVLT 1.5 beta, TWTC 0.8x. LVLT is a global roll-up; TWTC is in 75 local markets.  His firm owns over 3% of LVLT.

For more on this manager, head to posts on Corvex's position in CommonWealth REIT, as well as Keith Meister's pitch on ADT.


Check out the rest of the hedge fund presentations from the event: notes from Ira Sohn Conference 2013.