Saber has been managing client capital since 2014 using a value investing approach inspired by Buffett’s simple principles of value investing: stocks are pieces of real businesses, buy stocks for less than their fair value, and patiently think for the long-term.
Saber manages separate accounts and a partnership modeled after the original Warren Buffett partnerships from the 1950’s. Investors in the fund pay no management fees, and Saber only gets compensated for returns that exceed 6% annually.
John Huber is the founder and portfolio manager of Saber Capital Management.
Saber has been managing client capital since 2014 using a value investing approach inspired by Buffett’s simple principles of value investing: stocks are pieces of real businesses, buy stocks for less than their fair value, and patiently think for the long-term.
John has also written extensively about investing for well over a decade. Please see Base Hit Investing for investment writeups and articles on our investing strategy.
The names Saber and Base Hit Investing are metaphors that reference baseball and my broad philosophy: to make steady progress day after day, focus on continuous improvement, and emphasize value investing.
Kesa Ennen
Director of Operations
Kesa Ennen is Director of Operations at Saber Capital Management.
She manages operational systems, reconciles custodian data, and oversees quarterly deliverables and invoicing. She also coordinates compliance initiatives, ensuring organized documentation and regulatory readiness.
On the investor side, she leads onboarding and redemptions for clients and LPs, supports ongoing communication, and tracks prospective relationships in partnership with the Portfolio Manager.
If you’d like to invest with Saber Capital or learn more, please reach out to Kesa Ennen at kesa@sabercapitalmgt.com.
Research
Letters and Notes
Below is a collection of writing by John Huber that describes Saber Capital’s investment approach and ideas in more detail. To get on Saber’s distribution list, please visit our blog Base Hit Investing and subscribe to get new posts.
The writing below is a sample of our work. The full archives as well as our ongoing writing can be viewed at Base Hit Investing.
Please keep in mind that this collection of writing should be viewed as a way to better understand Saber’s investment approach, and for informational purposes only. Nothing here should be viewed as a recommendation, as some of the writing is old and some of the specific investments may have changed over time.
Case Studies
Case Studies
Thoughts on individual companies and industries. Older case studies live on this site; ongoing work is published on Base Hit Investing
One of the stocks I’ve received the most questions on recently is Charter (CHTR). I’ve never owned it, but I have followed it closely, along with its cable cousin, Comcast.
The industry that confounded value investors
Cable tempted value investors with recurring revenue, high free cash flow yields, and a capital allocation legend directing much of those cash flows. The results over the past decade were disastrous for stockholders, with CHTR down 42% and CMCSA down 30%.
The pain in the last five years has been particularly acute.
chart — CHTR vs CMCSA, 5-year price performance
Not exactly the stuff of legends…
Cable monopolies
The competitive position of cable companies in the early decades was far different than today: thousands of local franchises, each the only game in town. High variable margin revenue that was recurring and growing.
About ten years ago the cord cutting wave began. Cable bundle subscribers dropped from around 100 million at the 2014 peak to roughly half that today. Operators adapted — today they are internet providers with a TV business on the side.
Competition and the trend of ROIC
My best investments have tended to come from companies where returns on capital were improving. Over the intermediate term, the direction of ROIC matters much more to a stock’s return than its absolute level.
Bank of America was a far better stock than Wells Fargo over the last decade, even though WFC carried a higher ROE throughout.
chart — WFC vs BAC, ROE by year
Notice the slope of the ROE in each graph, not the level.
“It isn’t where you came from; it’s where you’re going that counts.”
Discount airlines and pricing power
Malone’s analogy is fitting. A large share of an airline’s cost structure is fixed, so every additional seat sold above cost is high margin, and an empty seat at takeoff is profit lost forever.
Cable internet has the same high fixed / low variable structure. That is operating leverage: a small decline in subscribers leads to a large decline in profits, and the incentive is to discount to keep customers.
Cable valuations
Charter earned $31 of FCF per share last year against a $126 stock, or roughly 4x FCF. Management expects capex to fall from $11.5 billion to $8 billion, which would raise free cash flow further — but the upgrade cycle in cable never really ends.
CHTR is trading like a call option on the company’s ability to keep revenue stable. It will be a big winner if broadband subscribers stabilise. For now I sit on the sidelines and watch this game unfold.
chart — CHTR/Cox combined earnings power — napkin math
SEC filings, CHTR/Cox proxy statements, my estimates
John Huber is the founder of Saber Capital Management, LLC. Saber manages an investment fund modeled after the original Buffett partnerships.
Disclaimer: John Huber and clients of Saber Capital own NFLX. Our fund has sold puts on CMCSA and VZ, and may again transact in any of the stocks mentioned at any time. This article is for educational purposes only and nothing here should be considered a recommendation.
Saber Notes
Saber Notes
Published on Base Hit Investing. Posts below are pulled live from the Substack feed and rendered in Saber’s own type; each one opens on Substack.
Substack’s own signup embed — subscribers land in John’s existing list.
Podcasts and Q&A
Podcasts and Q&A
Below is a collection of podcast appearances by John Huber where he describes Saber Capital’s investment approach.
Clients can also review our letters and past Saber Capital Zoom Q&A calls on the Client Login page. Please visit Base Hit Investing to get on Saber’s distribution list.
SAMPLE ARTICLE — real text from Importance of ROIC Part 1, trimmed. Any research card opens this same layout.
Update: For those interested, I wrote a 5-part series about the concept of return on incremental invested capital and also a few other writings that discuss ROIC.
A while back, I posted a couple articles on return on invested capital (ROIC) along with some comments on Joel Greenblatt’s Magic Formula. These posts attracted a lot of comments and email questions, and so I wanted to post some more thoughts on the topic of compounding generally, and maybe ROIC more specifically.
In this post I want to address a comment that has been made by numerous people regarding Compounders vs. “Cheap Stocks” and how some people have a tendency to completely fall into one camp at the expense of the other.
Valuation vs. Return on Capital — Depends on Time Horizon
First off, one commenter pointed out that various studies have shown that ROIC is a metric that doesn’t actually add much value to returns. In fact, these studies say that better results could be had by simply just buying cheap stocks. Forget the quality, just focus on valuation.
I believe this to be true — BUT, with a very important caveat. One very crucial point is often left out of these studies… Holding period. Most of these studies pick a group of stocks based on some value measure and then after 1 year sell those stocks and replace them with a new set.
But if you plan to hold your stocks for longer periods of time… 5 years, 10 years, or longer, then quality becomes much, much more important than valuation.
Why Does Wells Fargo Beat Everyone Else?
I did a post on Wells Fargo a few months ago where I discussed how WFC’s long term business results trounced all of the small community banks’ long term results, and the WFC stock price had the same outperformance. A bank that produces 15% ROE will always result in better shareholder returns over a bank that produces 7% ROE, given enough time.
chart — FAST long term, from the original post
Inline charts keep the original article’s figures at full column width.
Compounders Come in All Shapes and Sizes
One of my current holdings is a small bank that I purchased at around 60% of tangible book value and a P/E of around 7. The difference with this particular bank is that it has grown its intrinsic value by somewhere between 8-10% per year by my estimation.
These types of situations are rare (both cheap and high quality), but they exist, and they are the type of ideas I’m looking to find for our portfolios. These types of businesses are compounders.
John Huber is the portfolio manager of Saber Capital Management, an investment firm that manages separate accounts for clients. Saber employs a value investing strategy with a primary goal of patiently compounding capital for the long-term.
This piece is for informational purposes only and is not a recommendation to buy or sell any security. Positions may have changed since publication.
