A bullish investment thesis on Viasat, Inc. was posted on the r/Valueinvesting subreddit by user SupermacsFastFood. The company's stock was trading at $45.93 on January 16th.
Viasat, Inc. offers broadband and communications products and services in the United States and internationally. The thesis argues that the company presents a compelling investment opportunity, with a valuation that could reach $12 billion based on its existing cash flow. The strategy involves using free cash flow from Inmarsat to pay down debt related to acquisitions, which is said to create equity value without requiring growth acceleration, technological breakthroughs, or multiple expansions.
With the stock trading near a point where enterprise value equals revenue, any reduction in debt is described as flowing almost entirely to equity holders. This is presented as a direct mechanism for value creation. Under conservative assumptions, the process of reducing debt alone could double the company's equity value, implying a potential 100% return on equity from the current price.
The opportunity is characterized by the simplicity and predictability of the cash flow conversion process. The mechanics of debt reduction are described as straightforward and not reliant on market speculation or exceptional operational performance. The combination of a low current valuation relative to the balance sheet and a predictable debt paydown schedule positions Viasat as a high-conviction investment, with both equity and credit holders seen as poised to benefit from optimizing the capital structure.
In essence, Viasat is described as offering a clear path to unlocking shareholder value through financial management and disciplined execution. This presents an attractive risk/reward scenario for investors interested in a cash-flow-rich, capital-light situation with minimal reliance on external catalysts. The current trading level is said to make this opportunity particularly compelling.
Previously, a bullish thesis on Viasat, Inc. by Gskinny was covered in November 2024. That thesis highlighted the stock's steep decline, high short float, and potential upside from the Viasat 3 satellite and global coverage. The stock has appreciated by 351.6% since that time, driven by improving market sentiment and operational progress. SupermacsFastFood shares a similar view but emphasizes value creation through Inmarsat-driven free cash flow and debt reduction.
Viasat, Inc. is not on a list of the 30 Most Popular Stocks Among Hedge Funds. According to a database, 31 hedge fund portfolios held VSAT at the end of the third quarter, which was down from 37 in the previous quarter. While the potential of VSAT as an investment is acknowledged, the view is expressed that certain AI stocks offer greater upside potential and carry less downside risk.