market folly

Chris Hohn's hedge fund firm, Children's Investment Fund, has filed a 13G with the SEC regarding its stake in Time Warner Cable (TWC).  Per the filing, Children's now owns 5% of the company with over 14.1 million shares.

This means Hohn has increased his position size by over 4.23 million shares since the end of the first quarter.  The filing was made due to portfolio activity on March 6th.

TWC is set to be taken over by Comcast (CMCSA), pending regulatory review.  Hohn must be pretty confident that this deal goes through, though there's no way to know if/how he's hedged out this position.  Even if this deal does fall through, TWC shares likely have a 'floor' as it's been reported that Charter Communications (CHTR) would then be interested in acquiring TWC (something they tried to do previously).

US cable stocks in general also have rallied sharply over the past month on the news that while the FCC has imposed net neutrality, the operators won't be regulated on pricing.  One of the key tenets of the cable investment thesis is that these companies are oligopolies and could have pricing power for their broadband products.  Even if these companies lose video subscribers as customers shift to over-the-top (OTT)/streaming content products, people will still need a (fast) internet connection to receive this content.  

Per Google Finance, Time Warner Cable is "a provider of video, high-speed data and voice services in the United States with clustered cable systems located in five geographic areas including New York State, the Carolinas, the Midwest, Southern California and Texas."