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Burke Wealth Management Repurchased Charter Communications (chtr) Due To Its Improving Visibility And Business Trends
Burke Wealth Management, an investment management company, released its “Focused Growth Strategy” fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. The market had another outstanding year in 2024, with the S&P 500 rising 25.0%. The strategy had an even better year, with net returns of 28.4%. Looking a bit closer, it is clear that, similar to 2023, 2024 had a rise that was appreciated by everyone, but the overall market returns were concentrated in a small handful of stocks. In addition, please check the fund’s top five holdings to know its best picks in 2024.
In its fourth quarter 2024 investor letter, Burke Wealth Management emphasized stocks such as Charter Communications, Inc. (NASDAQ:CHTR). Charter Communications, Inc. (NASDAQ:CHTR) is a broadband connectivity and cable operator company. The one-month return of Charter Communications, Inc. (NASDAQ:CHTR) was -2.75%, and its shares gained 19.83% of their value over the last 52 weeks. On March 19, 2025, Charter Communications, Inc. (NASDAQ:CHTR) stock closed at $353.02 per share with a market capitalization of $50.134 billion.
Burke Wealth Management stated the following regarding Charter Communications, Inc. (NASDAQ:CHTR) in its Q4 2024 investor letter:
“Charter Communications, Inc. (NASDAQ:CHTR): Charter was a long-time holding for us that we sold in the first quarter of 2024 due to the uncertainty caused by the expiration of the Affordable Connectivity Program (ACP). ACP was a program in which the government paid broadband providers a $30 monthly stipend to connect low income consumers who qualified for the subsidy. This program was put in place during Covid in an effort to keep people connected who were suddenly forced to work or learn from home. I don’t know whether it is more surprising that the program was still in place in early 2024 given that the pandemic has been over for several years or whether the ACP proved to be the one government subsidy that failed to attain permanent status. Either way, the ACP was allowed to expire in May and that meant that the broadband providers had to transition customers who had been receiving the subsidy into paying plans. For Comcast, this equated to ~1.4M customers on a base of 30M which meant that the practical impact of the ACP expiration was little more than the expiration of a major promotion. For Charter, which had over 5M of its roughly 30M subscribers receiving the subsidy, the risks were much greater. Further complicating matters is the fact that Charter targets a debt to EBITDA ratio in the 4.0x-4.5x range as part of its levered equity strategy. This is a great way to boost the returns of a business that targets EBITDA growth in the mid-single-digits but things can get dicey in a hurry should EBITDA begin to contract. Given the uncertainty surrounding the need to wean almost 20% of the subscriber base off of a subsidy that had been in place for several years, we concluded that the risk profile of Charter was no longer one that we could tolerate. When discussing the sale in our Q1-24 Investor Letter, we noted that we would continue to monitor Charter for repurchase should the ACP controversy resolve in an acceptable manner…” (Click here to read the full text)
A line of cable boxes and modern televisions, representing the company’s video services.
Charter Communications, Inc. (NASDAQ:CHTR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 71 hedge fund portfolios held Charter Communications, Inc. (NASDAQ:CHTR) at the end of the fourth quarter compared to 61 in the third quarter. While we acknowledge the potential of Charter Communications, Inc. (NASDAQ:CHTR) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed Charter Communications, Inc. (NASDAQ:CHTR) and shared the list of most undervalued NASDAQ stocks to buy according to hedge funds. In addition, please check out our hedge fund investor letters Q4 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
