Deal or No Deal

Ever since Brian L. Roberts abandoned a hostile bid for Walt Disney four years ago, Wall Street has wondered when the Comcast chief executive and serial acquirer might make a play for another big media prize. The chatter picked up last fall, just before America's largest cable company confessed that it would add fewer subscribers than expected in the fourth quarter. Some investors worried that, with growth slowing, Roberts might try to pick off Yahoo! or NBC Universal—diversifying away from cable by wading into the murky waters of "content."

In January, dissident shareholder Glenn H. Greenberg warned Roberts to stick to what he knows best: distributing TV, Internet, and phone service over Comcast's 125,000 miles of pipe. As far as Greenberg was concerned, buying a Web site, cable network, wireless outfit, or other "noncore" business would "fritter away" the more than $2 billion in cash that Comcast generates annually. Greenberg, the boss of Chieftain Capital Management, a $5 billion investment fund that owns 2% of Comcast's stock, brazenly questioned whether Roberts should be running the company. The broadside jolted the normally unflappable Roberts into action. In a mid-February conference call with investors, he vowed to reinstate Comcast's dividend after a nine-year hiatus and repurchase $7 billion in stock by 2009, two moves designed to put more of Comcast's money into shareholders' hands. His 88-year-old father and Comcast founder, Ralph, even gave up his hefty compensation package. And Roberts promised that Comcast "was not spending any time on any of the large, transformative acquisitions" that Wall Street had been buzzing about.

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Comcast Investors Seek Buyback, Payout as Shares Drop

Comcast Corp., the biggest U.S. cable-television provider, may have to buy back more stock or pay a dividend to satisfy investors after a 35 percent drop in the shares last year.

Chief Executive Officer Brian Roberts should curb spending and free up cash that can be used to reward shareholders, said Pat Becker Jr., whose Becker Capital Management in Portland, Oregon, owns 1.2 million shares.

``That's the key to moving the stock,'' Becker said in an interview. ``You never get that payoff because they have to spend so much to upgrade and fend off the competitive environment.''

Comcast was the seventh-worst performer in the Nasdaq 100 Index in 2007 as a $6 billion investment in cable set-top boxes and networks failed to stem a slowdown in subscriber growth and customer defections to Verizon Communications Inc.

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Chieftain Capital: Major shareholder wants Comcast CEO out

John Shapiro, co-founder and managing director of Chieftain, said his firm sent the letter after failing in other attempts to get management to change.

"Their emphasis has been growth, not return to shareholders," he said. "There's nothing wrong with growth, but if you overpay for it, it dilutes the value to shareholders."

Shapiro said Comcast has spent over $80 billion on acquisitions in the past decade, often paying more than 20 times operating cash flow. And he contended that Comcast spends money on things outside its core cable business, such as regional sports networks, Internet sites and the wireless spectrum.

If Comcast can afford to overpay for acquisitions, Shapiro said, then it should buy back its undervalued shares. But buybacks have so far been "modest relative to their capability," he said.

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Glenn Greenberg: Concentrated and Focused Fund

What level of confidence do you need if you have to invest $4 billion dollars in just 6 stocks? Also among these 6 stocks the number one position is 40% of the total portfolio? This is exactly what Guru Glenn Greenberg is doing. It is also a key factor why he could achieve more than 22% a year since 1984.

You may not know Glenn Greenberg, it is not surprising because he does not entertain investment ideas from Wall Street analysts; he does not do marketing, and he does not even speak to his clients. He only communicates with them with two written updates per year.

The most important rule for Mr. Greenberg is that if they lacked the confidence to put five percent of their portfolio in a company's stock, they would not buy any. Therefore he has a very concentrated portfolio. Due to this excess concentration Chieftain typically has less than ten securities in their portfolio. The most number of securities Chieftain has held is twelve and the least, six, while maintaining a 30% cash position.

How does he invest? He said that a person should have an approach that over the long-term will win and will not fail. Investors should not use an approach which can provide both huge returns and huge losses. An investor must figure out an approach that will allow them to be a long-term winner because this is a long-term business. Investors need to win successively because they will be taking profits and reinvesting them continuously over their lifetime.

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Glenn Greenberg Value Investor

Investors can learn an extraordinary amount from other successful value investors. Glenn Greenberg’s investment approach is not covered enough. His firm, Chieftain Capital, has produced returns of 22.5% from 1984 to 2004. His process is one that resonates with me and that I have tried to emulate in my investment philosophy.

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