I’m Selling Ascent Capital for Something Better

It's been over three years since my Special Situations portfolio acquired shares of Ascent Capital (NASDAQ: ASCMA  ) . The total position is up a modest 31%, but crucially I missed a key sell signal that would have left my total return near 80% -- the sale of half of John Malone's voting interest in the company at a much higher price. Because I've got another excellent stock opportunity in hand, I'm selling my shares in Ascent.

Ascent has continued to grow its portfolio of alarm monitoring accounts, and I've been generally satisfied with its operational performance. While the pricing multiples for acquired accounts has ticked up, the competitive landscape overall seems to be reasonable. I also liked the company's occasional share repurchases. For those reasons and the benefits of scale in the business, I think Ascent will continue to live up to its name.

However, I missed my key signal on when to sell, and that was when legendary John Malone sold half his voting interest back to the company some months ago, when the stock was in the $80s. I'll be storing this lesson away so that I don't make the same mistake in the future.

Despite the stock's 30% drop from its 52-week high (indeed because of it), I think the stock could perform well from here. But without a clear future catalyst, I'm inclined to sell, especially because I have another near-term opportunity that could return 100% in short order. If you'd like to know what it is, follow me on Twitter: @TMFRoyal.

So in the next few days I'll close out my position in Ascent and announce my latest buy. I'm continuing to find high return ideas as part of my Special Situations portfolio and will have more new money-making ideas out later this week, so follow me on Twitter

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Jim Royal

Jim is a special-situations investor focusing on transactional events (such as spinoffs, recapitalizations, or reorganizations, among others) that create advantageous stock mispricings.

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8/28/2015 4:00 PM
ASCMA $27.40 Up +0.55 +2.05%
Ascent Capital Gro… CAPS Rating: **