NEW YORK (TheStreet) - Liberty Global (LBTYA) may be a smart way to invest for those who want to put their money behind Netflix's (NFLX) expansion in Europe.
If Netflix does succeed in attracting added European-based subscribers, Liberty Global may see the benefit of increasing subscribers and higher-cost service bundles, according to Philippe Laffont of technology and media-focused hedge fund Coatue Management.
Laffont, in a presentation at the 19th Annual Sohn Investment Conference, highlighted Liberty Global as a stock that will benefit from growing broadband and wireless usage in Europe, and the savvy management of the company's capital. Laffont also noted that consolidation among cable and wireless providers in Europe could ultimately put the company in the hands of Vodafone (VOD), AT&T (T) or Comcast (CMCSA).
Currently, European markets are well behind the United States when it comes to streaming video usage. While Netflix shows such as House of Cards and Orange Is the New Black have created a sensation in the U.S., the same is not true in key European markets such as Britain. "That will change very quickly with Netflix," Laffont said of the Reed Hastings-run company's international expansion. Laffont added at the Sohn Investment Conference that he believes Liberty Global is best positioned to benefit.
Laffont also described Liberty Global as a cheap stock based on basic valuation methods. Currently, the company generates about $4.4 billion in un-levered free cash flow, which Laffont believes can grow at between mid-teen to mid-20% rates depending on Liberty Global's share repurchase activity.