Inside John Malone’s World

Credit: Barron’s. John Malone and Greg Maffei / Illustration by Michael Hoeweler

Barron’s has done a big article on John Malone’s Liberty empire. Barron’s took a deep dive into the world of Liberty and it’s various moving parts. Malone has been one of the greatest capital allocators of our time and investors that has followed him through the years has tremendously benefited.  Malone has been one of the subject in the famous book The Outsiders by William N. Thorndike (must read).

Article: John Malone_s Liberty is a different kind of media empire—and its stocks look attractive – Barron’s

The Cost of Shareholder Value

Why Gotham’s Greenblatt Likes ‘Gushing’ Cash-Flow Stocks

Good video by one of the market’s great, Joel Greenblatt. Joel also wrote one of the best book on investing ever with one for the worst title ever: You Can Be a Stock Market Genius: Uncover the Secret Hiding Places of Stock Market Profits.

“We try to stick to companies gushing free cashflow. Huge returns on capital, meaning they deploy their capital well.

That avoids some of the value traps from ‘traditional’ value. I think that brings up the point – we don’t really think of value as low price-to-book, low price-to-sales investing. We’re actually valuing businesses based on cashflow, like a private equity investor would.

So if you’re trying to figure out what a company’s worth and buy it for less, at a bigger discount, that will never go out of favor even if value as defined by companies like Morningstar, which is low price-to-book or low price-to-sales investing. That may or may not stay in vogue. It may be out of favor sometimes, in favor, it may not even outperform the market going forward.

That doesn’t mean that much to me because those have been correlations that have worked with more than your fair share of companies that are out of favor. I imagine they’ll come back a some point. We’re actually valuing businesses based on cashflows. That’s what stocks are, ownership shares in businesses.”