A reader emailed me a question regarding my holding in Liberty Media (L/NYSE). I said that I'd owned the stock for a while when I posted about buying additiional shares last week. The reader wanted to know my thoughts on Liberty Global (LBTYA/NASDAQ) and Discovery Holding Company (DISCA/NASDAQ), since Liberty Media has spun off both and I received shares in the 2 new companies as a result.
My thoughts:
- I think both spin offs were good moves by Liberty Media. Wall Street seems to think the Liberty Global spin off was more of an "unlocking" of Liberty Media's value than the recent Discovery Holding one. That may be true, but I still think both are positives.
- I'm holding all shares spun off to me and plan to for the foreseeable future. Liberty Global was spun off last year at a per price in the mid-to-upper $30s, if memory serves. They eventually sunk into the $20s and I missed a golden buying opportunity. Ouch. They closed at $46.89 yesterday. Ouch again.
- Discovery Holding was spun off at the per share price of $15. They've since dropped to around $14. If they go much lower, I'm going to be buying. Discovery is not very popular with analysts right now because it only has 50% ownership of Discovery Communications. The other owners, each with 25% stakes, won't be shedding their interests for the next couple of years because of tax considerations. Hopefully, it will become even less popular in the short run and those of us with 3-5 year time horizons can snap up shares on the cheap. If I do buy, you'll read my full rationale here.
Right now, I rank Liberty Media as the best buy of all 3 based on its current stock price. Hey, that's why I added to my position last week. But I'd happily buy more of the others at the right price.
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