Value Investing

John Malone 2014 Annual Letter: Spinoffs

John Malone’s annual letter to Liberty Interactive shareholders for the year ended December 31, 2014.

For some help see this great presentation by Denali on Liberty and its vehicles 

We often start by writing ‘We been a busy year and this one would be no exception. If you held both of the Liberty Interactive tracking stocks a year ago. some of your shares have a new ticker JUNTA a QVCAI. you received a distribution of shares of Liberty Ventures Group and you hold shares of a whole new publicly traded company – liberty TripAdvisor Holdings. These activities were consistent with our strategy – create long-term shareholder value tax efficiently – and we believe, successful
In August 2014. Liberty Ventures Group spun-off Liberty TripAdvisor. which holds our former stakes in TripAdvisor and BuySeasons. We created liberty TripAdvisor to tax efficiently highlight the value of our TripAdvisor investment and provide investor choice, while retaining control and setting up an efficient structure. Liberty TripAdvisor raised a $400 million margin loan, with $350 million of this being distributed to Liberty Ventures Group, which will be used for repurchases of our shares within twelve months of the spin-off.
Following the Liberty TripAdvisor spin-ott we re-evaluated our structure and best opportunities for investment. which subsequently led to the reattribution announced on October 4th. In this reattribution, the digital commerce companies and SI billion of cash were reattributed from Liberty Interactive Group to liberty Ventures Group with liberty Interactive Group shareholders receiving a tax4ree dividend of liberty Ventures Group shares. In connection with the reattribution we began referring to Liberty Interact we Group as QVC Group, and the tickers were changed to QVCA and QVCB. Our rationale for the reattribution was: • Create a pure-play equity focused on multichannel commerce, the QVC Group, • Achieve our target leverage at QVC: • Place capital where it had the most opportunities for investment; and • Receive value for the digital commerce companies by aligning them with a more growth-oriented investor base.
Although the initial reaction of some was hesitantwe are happy to say that as of April 6th both QVCA and LVNTA now trade above their respective pre-reattnbution levels. In that time. QVCA (inclusive of the LVNTA dividend received) has appreciated approximately 25es,whie LVNTA is up approximately 16% over the same pericd.

John Malone Liberty Interactive

See full PDF below.