Quiet Cable Guy
Nobody likes to talk much on the record about Bill Huff, least of all Bill Huff. The 54-year-old bond hedge-fund manager is almost obsessive about his privacy, declining for years to talk to the press and choosing to work far from the rumor mills of Wall Street in Morristown, N.J. But Huff is hardly invisible. High-powered media CEOs such as Time Warner's (TWX ) Richard D. Parsons, Cox Communications' (COX ) James O. Robbins, and Comcast's (CMCSK ) Brian L. Roberts certainly know who he is, especially as they mull a bid for bankrupt cable company Adelphia Communications (ADELQ ).
That's because Huff's W.R. Huff Asset Management Co., one of Adelphia's largest bondholders, has quietly become a feared but respected force in cable. Through his holdings in cable, telecom, hospitals, and other assorted industries, he injects himself into companies' operations, mostly troubled ones, using razor-sharp elbows with executives, banks, and other creditors to maximize his investments. Sometimes he cashes out. Other times he holds on to his stake and puts his representatives on boards. "Bill Huff has emerged as one of the key players in the industry," says Aryeh Bourkoff, a cable analyst for UBS (UBS ). "It is not a good thing to be caught in his crosshairs," says one investment banker. That's why everyone at Adelphia treads lightly around the investor whose company is estimated to have more than $15 billion under management. Any bids that come in for the cable operator's 5.3 million subscribers will surely face intense scrutiny from Huff, whose representative heads Adelphia's unsecured creditors' committee. Time Warner, Cox, and Comcast execs declined to comment on Huff.
In a series of rare interviews, Huff told BusinessWeek he believes Adelphia's assets would be more valuable if combined with another company. The estimated value for Adelphia ranges from $17 billion to $20 billion. But Huff says he's in no hurry to see the company sold. "I'm not caressing any trigger to get out of this," he says. "The price will have to be correct. The devil is always in the details." Huff won't say what he believes is the correct price. Adelphia, whose founding Rigas family is standing trial in federal court on charges that some members looted the company, filed Chapter 11 in 2002. In the months ahead of the filing, Huff snapped up bonds at cents on their par value. After Adelphia was in bankruptcy, he generally supported the new management's reorganization plans. Then other bondholders -- Blackstone Group, Franklin Advisors, and Fidelity Management & Research -- split from Huff and other unsecured creditors and pushed execs to announce in April an auction for the company while it is still in Chapter 11. Adelphia execs declined to comment.
If Adelphia decides the bids it receives are inadequate and it emerges from bankruptcy, Huff's bond holdings would most likely be converted to stock, making him a top shareholder. Huff isn't letting on about his plans, but his history suggests he would stick around to keep an eye on how execs are running the company. "The perfect situation for Bill is a good business and a bad balance sheet," says one executive who knows him. "He has done a great job fixing mismanaged companies."
Huff had his first big success in cable as a bondholder at troubled British cable company NTL Inc. (NTLI ). There, he sought to straighten out the business quickly once it fell into bankruptcy, jettisoning unprofitable products, upgrading billing systems, and installing productivity measures for management. "He's tough and detail-oriented. He is explicit about saving a company," says former NTL CEO J. Barclay Knapp, who recalls receiving lots of late-night calls from Morristown. Huff says he is conservative in his approach to investments, but "sometimes you get out the Ted Williams bat." And that he did, putting his own people on the board and serving as NTL's chairman for a time in 2003. "Fundamentally, these companies need to be operated for the benefit of shareholders. They need customers who are profitable and managers who don't follow the metric du jour."
Since NTL, in which Huff owns a 13% stake, emerged from bankruptcy in January, its shares have risen from $8 to $60. He's trying for a repeat performance at Telewest Communications PLC (TWSTY ), another British cable outfit, also in bankruptcy. He has fought hard for his fellow bondholders, and together they will end up owning 98.5% of the company when it comes out of bankruptcy. (He'll own 19%.) Its market cap has risen from $700 million to $3.5 billion in nearly 15 months.
Huff is the first to credit his team for his success. He employs about 60 people: Forty are research analysts studying financials all day. Fearing hackers, he won't use company e-mail, opting for Yahoo! mail instead. And he claims only five people have his cell-phone number. "There is a quirkiness there," says Knapp, now a senior fellow at Johns Hopkins University. Huff has been characterized in the British press as an American cowboy and in the South American media as a gringo looking for gold, but the label that irritates him most is vulture investor. "We're about monstrous value creation," he snaps. But as the bidding heats up for Adelphia, it's almost certain a few bankers and executives along the way will end up looking like carrion.
By Tom Lowry in Morristown, N.J.