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Buxton: Liberty bid finally highlights Virgin Media's cash-flow power

Buxton: Liberty bid finally highlights Virgin Media's cash-flow power

Richard Buxton, head of UK equities at Schroders, believes Virgin Media’s strong cash-flows have gone unrecognised and that this is only changing amid take-over talks with Liberty Global.

It emerged last night that Liberty, the US media group chaired by billionaire John Malone, is preparing to bid for Virgin Media, which saw the UK cable operator’s shares soar 16% or £3.85 higher, to £28.58.

Citywire A-rated Buxton, who has 3.5% of his UK Alpha Plus fund in Virgin Media, believes the company is a ‘winner’ in its field.

‘We’ve been shareholders in Virgin Media since it listed in London, firmly believing that the strength of its competitive positioning would ensure that it is a winner in UK broadband and TV,’ said Buxton.

‘The strength of the cash-flows has not been recognised sufficiently to date by the market and it is interesting that an experienced owner of cable has done so.’

According to the Financial Times Liberty has a $3.3 billion cash pile with which to part fund a deal. Virgin Media, which has a main listing on the US Nasdaq technology exchange and a secondary listing in London, was worth £6.7 billion ($10.6 billion) before today's surge.

Over three years to 4 February, Buxton's fund has delivered 45.8%, far outstripping the benchmark’s 35%.

 

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46/152 in Equity - UK (All Companies) (Performance over 3 years) Average Total Return: 54.61%
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