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Being a virtual monopoly has its advantages - just ask
CMCSA). Comcast benefits by being the only game in town over much of its coverage area, a benefit of owning the costly cable infrastructure that connects 53 million households and makes Comcast the largest cable utility in the U.S. Around half of those 53 million homes are paying TV, internet, or phone subscribers.
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That "network effect" is one of Comcast's biggest advantages in 2013. Even as new rivals offer competing services over other mediums, Comcast's modern network has the benefit of the hefty bandwidth and expandability that cable provides. From an operations standpoint, the firm's acquisition of 51% of NBC Universal has a similar effect of ratcheting margins wider. Since it's now able to greatly reduce its licensing costs for content it owns, it can earn a bigger profit for its efforts. Top-line growth opportunities exist as Comcast consolidates its customer base with "triple play" deals that package complementary services together and hammer down customer acquisition costs.
Being a monopoly has some downsides. For one, the firm is subject to more regulatory scrutiny than most. For another, Comcast has a horrific customer service reputation and a large number of customers who would likely leave given a decent substitute. That's a pretty good reason to be wary of CMCSA as new tech enables more competition from other utilities.
But Renaissance is a fan of Comcast nonetheless. The hedge fund bought a 1.39 million share position in the cable utility this past quarter. That's good for an $81 million chunk of RenTec's portfolio.
To see the rest of Renaissance Technologies' plays, check out the
Renaissance Technologies Portfolio on Stockpickr.
-- Written by Jonas Elmerraji in Baltimore.