Major institutional investors appeared to be focusing on boosting their positions in satellite TV, telcos and cable programmers in the second quarter, while shedding holdings in some of the more traditional cable-distribution names.
The four major media-holding mutual funds — Capital Guardian Trust, Capital Research Global Investors, FMR LLC and Janus Capital Management — revealed their shifts in holdings via quarterly securities filings in mid-August.
Capital Guardian Trust and Capital Research, led by savvy media investor Gordon Crawford, appeared to continue their disenchantment with the cable industry. Both funds have been systematically reducing their cable holdings over the past few years, and 2008 is following the same pattern.
Capital Research shed 1.67 million shares of AT&T, 1.33 million shares of Ciena Corp. and 871,000 shares of Yahoo in the second quarter, making just one major buy: 1.94 million shares of Cisco Systems.
Capital Guardian, considered the more conservative of the two funds, shed 695,000 shares of Verizon Communications, 771,000 shares of The Walt Disney Co. and 557,000 shares of Time Warner Inc.
Capital Research's big buys were for Yahoo (29.9 million shares), in which it is the largest shareholder; Verizon (16.2 million shares); and Time Warner Inc. (9.88 million shares).
Crawford's Capital Research took sides against Yahoo in the period in which Microsoft tried to buy it out. Capital Research raised its Yahoo stake to 10.1% from 5.2% between the end of 2007 and March 31, 2008.
Yahoo turned down Microsoft's initial bid (of $31 per share), holding out for $37, and Microsoft walked away from the table in May. Yahoo rose as high as $29.98 during the public battle, but trades in the $19 range now.
In upping its Time Warner position, Capital Research was bolstering an already vast hold of about 187.9 million shares. The fund sold 15.2 million shares of Comcast stock during the period, ending June 30 with 44.3 million shares. But that's still nearly double the 26.1 million Comcast shares it had during the same period in 2007.
Janus made its biggest buys in the quarter with DirecTV (1.9 million shares), Disney (1.7 million shares) and AT&T (1.1 million shares).
Janus's biggest sales were in News Corp. (14.5 million shares), Sprint Nextel (7.9 million), Comcast (3.3 million), Liberty Global (3.1 million), Discovery Holding (1.7 million) and Cablevision (1.5 million) stock.
FMR, the parent of the Fidelity Funds, was a contrarian, buying heavily into distribution in the period. It bought 4.8 million shares of Comcast Class A shares and 4.7 million Comcast Class K shares; 6.8 million shares of Charter Communications and 11.3 million shares of DirecTV Group.
FMR's biggest subtractions were on the programming side, selling Time Warner (29.4 million shares), News Corp. (4.1 million shares), Disney (2.3 million shares) and Viacom (2.4 million shares).
FMR also unloaded 16.9 million shares of Motorola, ending the quarter with 57.3 million shares.
Some other funds that had been new entrants into cable stocks appeared to be refocusing their positions in the second quarter.
Acadian Asset Management continued to reduce its position in DirecTV Group — it sold 4.8 million shares in the second quarter and has sold 7.2 million shares since June of last year — while beefing up on Liberty Capital, the tracking stock of Liberty Media that contains its interest in Major League Baseball's Atlanta Braves and minority interests in several media companies.
Liberty Capital was a popular stock for a few funds. In addition to Acadian adding 3.6 million shares, Franklin Resources added 1.3 million shares in the period and Janus Capital added 1.05 million shares.
Joyce said that Liberty Capital may be getting popular because the funds can smell a deal brewing.