Liberty In Limbo

| About: Liberty Media (FWONA)

Liberty Media (LMCA) reported earnings last week. As usual, the numbers were meaningless as LMCA is a collection of assets including a majority stake in Sirius XM (NASDAQ:SIRI) and meaningful minority stakes in Live Nation (NYSE:LYV), Charter Communications (NASDAQ:CHTR) and Barnes & Noble (NYSE:BKS). Each of these companies had already reported their latest earnings leaving little fresh information for LMCA to disclose.

LMCA is trying to buy the 47% of SIRI it does not own. The goal is to get full control of SIRI's massive and rapidly growing free cash flow. LMCA would use the cash flow to (1) make more investments, and (2) buy back its own shares. One plan for the cash flow was to help finance CHTR's attempted takeover of Time Warner Cable (TWC). With Comcast now buying Time Warner Cable, that option appears off the table.

While LMCA waits for the independent directors of SIRI to respond to their offer, LMCA shares are caught in limbo. LMCA is controlled by John Malone, who can arguably be called the Warren Buffett of the media world. LMCA shares have struggled after a year of great performance given the uncertainty over the immediate future. Given his track record, I think "In Malone We Trust" is the best strategy for right now. Adding comfort during this period of uncertainty, LMCA shares are trading at about a 20% discount to underlying net asset value, the largest discount in over a year.

LMCA is widely held by clients of Northlake Capital Management, LLC, including in Steve Birenberg's personal accounts. Steve is sole proprietor of Northlake, a registered investment advisor. Northlake's regulatory filings can be found at LMCA is a net long position in the Entermedia Funds. Steve is portfolio manager and managing partner of Entermedia, long/short equity hedge funds focused on media, entertainment, leisure, communications, and related technologies.

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