Is it Worthy to Invest in Cable One, Inc. (CABO)?

Heartland Advisors, an investment management company, released its “Heartland Mid Cap Value Fund” fourth quarter 2022 investor letter. A copy of the same can be downloaded here. In the fourth quarter, the strategy returned a 12.38% (Net of Advisory Fees) compared to a 10.45% gain for the Russell Midcap Value Index. The stock selection in Real Estate, Healthcare, and Energy sectors led to the strategy’s outperformance in the quarter. In addition, you can check the top 5 holdings of the fund to know its best picks in 2022.

In its Q4 2022 investor letter, Heartland Mid Cap Value Fund mentioned Cable One, Inc.  (NYSE:CABO) and explained its insights for the company. Founded in 1986, Cable One, Inc.  (NYSE:CABO) is a Phoenix, Arizona-based cable company with a $3.7 billion market capitalization. Cable One, Inc.  (NYSE:CABO) delivered a -7.69% return since the beginning of the year, while its 12-month returns are down by -54.95%. The stock closed at $657.14 per share on March 21, 2023.

Here is what Heartland Mid Cap Value Fund has to say about Cable One, Inc.  (NYSE:CABO) in its Q4 2022 investor letter:

“Volatility in the fourth quarter allowed us to add what we consider a best-in-class holding in communications: Cable One (NYSE:CABO). Cable One is a broadband and cable provider with a focus on rural markets in the Midwest, Northwest, and Southeast. Graham Holdings Company (GHC) spun CABO out in 2015, and investors became attracted to management’s strategy to exit pay TV, which has been in secular decline amid the streaming boom, in favor of more-profitable broadband. As a result of this early strategic pivot, CABO operates with one of the highest margins in the cable industry.

The stock, a perceived “work from home” winner during the pandemic, became overvalued in 2021. So far this year, though, the stock has fallen about 60%, and it now trades at just 8.3 times Enterprise Value to EBITDA (EV/EBITDA) over the next 12 months. By comparison, CABO’s median valuation post spin-off is 11.5 times EV/EBITDA.”

Photo by Mika Baumeister on Unsplash

Our calculations show that Cable One, Inc.  (NYSE:CABO) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Cable One, Inc.  (NYSE:CABO) was in 27 hedge fund portfolios at the end of the third quarter of 2022, compared to 22 funds in the previous quarter. Cable One, Inc.  (NYSE:CABO) delivered a -6.44% return in the past 3 months.

In March 2023, we also shared another hedge fund’s views on Cable One, Inc.  (NYSE:CABO) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters Q4 2022 page.

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Disclosure: None. This article is originally published at Insider Monkey.