Investment Thesis: GCI Liberty (GLIBA/K) - A Classic "Malone Play" with Short-Term Catalysts
GCI Liberty (GLIBA/K) is not a typical growth REIT or telecom company. It is an "asset play" structured by one of history's most successful capital strategists, John Malone. Following its recent spin-off from Liberty Broadband, the company is significantly undervalued, offering an asymmetric opportunity with a strong risk-reward profile.
Our investment thesis is based on three key pillars:
- An Undervalued, High-Quality Asset: GCI is the leading telecommunications provider in a unique and isolated market: Alaska. This grants it a structural competitive advantage and strong cash flows. Despite challenges in the consumer market, the business segment has shown robust strength, with 14% revenue growth and a 26% increase in Adjusted OIBDA in Q2 2025. The market, however, values the company at a low 10.5x P/E multiple, which suggests unwarranted skepticism and leaves it significantly below the global peer average.
- The Malone Tax Arbitrage Opportunity: The spin-off was a deliberate move by Malone. In doing so, he gained a new tax basis and a tax shield valued at up to $420 million. John Malone has been explicit in his intent to use this shield to seek out "unusually high pretax return" acquisitions in the communications sector. In other words, GCI Liberty is not just a free cash flow business; it is also a highly advantageous acquisition vehicle, giving it significant optionality value.
- Management Commitment & Value Catalysts: With John Malone as Chairman, the company has the potential to be a classic asset play. Recent insider trading records show that Malone himself has been buying GCI Liberty shares on the open market, which aligns his interests with shareholders and demonstrates his conviction. The short- to medium-term catalyst for a re-rating of the stock will be the combination of GCI's solid operational performance, the completion of its Alaska investment projects, and any strategic acquisitions by Malone that utilize the tax shield.
Conclusion: GCI Liberty is an opportunity for the patient investor who understands the intricacies of Liberty's corporate structures and John Malone's history of creating value. The market has not yet fully priced in the company's potential as a free cash flow operation, the inherent value of its tax asset, or the Malone catalyst. We believe a fair valuation for GCI Liberty falls in the range of $55 to $75 per share, which represents a substantial margin of safety and significant upside potential from current price levels.
Disclaimer: As with any investment, risks exist. These include competition from services like Starlink, a reliance on government subsidy programs, and the possibility that Malone's direction may not materialize. However, we believe the company's structure and management's experience outweigh these risks.
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