In addition to a flood of earnings reports, the turning of the
quarterly calendar also gives investors a number of other sets of
information for investors to pour over.
After earnings reports, possibly the second-most analyzed set
of reports are those filed with the Securities and Exchange
Commission on Form 13-F. This is where large investors and
investment managers with more than $100 million in assets report
what they had in their portfolios at the end of the quarter.
The "at quarter's end" nature of the filing means we can't
tell what positions investment managers may have initiated and
eliminated during a particular quarter, but we can track changes
from quarter to quarter. This means that the filings of managers
to tend to make short-term bets tell us much less than the
filings of investors who tend toward longer-term investments.
Naturally, it follows that Warren Buffett, the man famous for
saying "our favorite holding period is forever," publishes
one of the the most scrutinized Form 13-Fs every three
months. It is certainly interesting to see which positions
Buffett is adding to, but given Buffett's well-known bias toward
a buy-and-hold strategy, it may be more telling to see which
stocks he's selling.
One particularly interesting sale Buffett made in the fourth
quarter was his entire stake in Dish Network (
). This isn't the first time Buffett has sold an investment, but
considering he established the position in the second quarter of
2013 and then sold it in the fourth quarter, it seems he changed
his mind on the stock pretty quickly.
He doesn't seem to have commented on the sale specifically,
and didn't mention the company at all his is most-recent
shareholder letter, so we're left to speculate about what changed
his mind (Even though Berkshire turned a profit on its DISH
investment, I'm relatively certain something must have changed
his mind about the company. Selling just because the stock went
up has never really been Buffett's style.)
One possible issue is that Dish has tried, unsuccessfully, to
buy both Sprint (
) and Clearwire recently. The company is currently in pursuit of
Lightsquared, which is in bankruptcy, but various legal
entanglements, including some
possibly shady purchases
of Lightsquared bonds by Dish Network's chairman Charlie Ergen,
could keep that acquisition tied up in court for a while.
My guess is that some part of this trio of as-yet unsuccessful
acquisitions turned Buffett off to Dish.
Those things aside, the company also finds itself in the
unenviable position of being in second place a satellite TV
industry that has just two players. The company does compete with
cable companies as well, but that simply moves DISH to third
place when you look at the entire paid-television landscape.
Not everything is negative for the company, it has some
relatively substantial wireless spectrum assets. Dish also
exceeded expectations for the number of subscribers it added in
the third and fourth quarters.
That said, the company has yet to establish a clear plan for
those spectrum assets and while earnings are up now, content
costs are likely to rise, and the company's auto-Hop
commercial-skipping feature is loathed by broadcasters who will
likely take a hard line with the company going forward.
Dish Network is also closely controlled by Ergen, who has
about 84% of the votes, meaning it is unlikely that the company
is going to sell itself, or any of its assets any time soon.
Dish Network is a company, and a stock, that has performed
well recently, but it is in a weak position in a very competitive
industry, so its recent performance could easily disappear if the
competition adjusts its strategy.
if Warren Buffett decided he was done with the stock
after just two quarters, that means one of the greatest investors
of all time couldn't find a reason to keep owning the stock.
Traders who think DISH's bull run is nearing its end could
consider a June 70/75 bear-call credit spread for a 70-cent
credit. That an assigned return of 16.3%, or 57.7% on an
annualized basis (for comparison purposes only). This position
will return a full profit so long as the stock is below $70 at
June expiration, giving this trade about 12% downside