More Join Dolan Party

Harbinger Capital wasn’t the only hedge fund to beef up its position in Cablevision Systems in the past year. At least one new institutional investor has emerged through Securities and Exchange Commission filings and more than one dozen existing shareholders have increased their positions in the past 12 months — and it appears, their influence — on the Bethpage, N.Y.-based cable company.

According to SEC filings, Stark Offshore Management, a Milwaukee-based fund of Stark Investments, increased its holdings in Cablevision to 4.8 million shares as of June 30, compared to zero the previous June.

Other funds that have invested in Cablevision in the past substantially increased their holdings over the same period. Goldman Sachs Group led the way, ending this June with 6.6 million Cablevision shares compared to 196,489 shares in June 2007.

Other big buyers included Farallon Capital Management (adding 5.6 million shares in the period); State Street Capital (adding 700,000 shares) and ING Investments (adding 1.5 million shares).

Some of the larger institutional holders of the stock also beefed up their positions, including the four funds that helped to thwart the Dolan family’s third attempt to take Cablevision private last October.

Clearbridge Advisors added 800,000 shares in the period, ending with 33.2 million; T. Rowe Price more than doubled its position from 13.1 million shares in 2007 to 28.2 million shares in 2008; Gamco Investors added 600,000 shares to end June with 19.8 million shares; and Marathon Partners added 4.3 million shares in the 12-month period, ending June with 16.5 million Cablevision shares.

Harbinger, led by activist investor Philip Falcone, created the most noise over the past month when it first revealed that it owned 11.5 million shares of Cablevision stock, purchased sometime during the second quarter of this year. Many analysts saw that as a signal that Cablevision’s plan to boost value was in part because of pressure from shareholders. Later in August, Harbinger said that it had further increased its Cablevision stake to 18.95 million shares or 8.1% of the MSO’s outstanding stock.

In a research report Aug. 24, Citigroup media analyst Jason Bazinet wrote that one interesting development from the increase in the number of institutions holding the stock is that the level of concentration among top shareholders has risen dramatically.

Bazinet estimates that a year ago, the top shareholders controlled about 58% of the non-Dolan stock in the company. Today, that concentration is about 73%. That, Bazinet wrote, may have forced the Dolan family to listen more closely to investor needs.

But despite their newfound influence, Bazinet does not believe Cablevision’s institutional shareholders will be able to affect any great change on the company. The power still sits with the Dolan clan, which controls 74% of the vote and nine of 17 seats on the board of directors.

Bazinet believes that the interests of class-A shareholders (like the institutions) are now much more closely aligned with those of the class-B shareholders (the Dolans). And that is likely due to the dramatic appreciation in the stock price.

Cablevision shares are up about 48% ($10.19 per share) since July 30, closing at $31.44 each on Sept. 3. And that, the analyst believes, has also reached its peak.

At its current price, Cablevision is trading at about a 1 times premium to Time Warner Cable and 1.1 times Comcast, its two closest urban cable peers.

“For our part, we don’t think there much room for further equity appreciation from current levels,” Bazinet wrote.