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IACI - IAC/InterActiveCorp


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LOL

i bought IAC just about a week ago and glad to see them deploying the proceeds on Match spin-offs.

IAC has been an amazing laboratory of value creation.

 

I recommend folks to listen to the 3 hours long (you can fast forward) of the investor call in July.

Its products are low key (Vimeo vs. YouTube), so you can buy the whole at good value vs. sum of parts.

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Can anyone share thoughts on IAC?  I only casually looked at IAC previously, because ... didn't really their business, per se, so it kind of biased my level of focus.  But I come to realization that I like capital allocator, compounder type investments (ROP, Constellation, DHR, etc), and seems like IAC is one of those. 

 

Is the general idea that IAC has capable leadership in Levin (he seems like a good dude), under valued on SOTP, and are shareholder friendly?  MGM sounds atypical, but seems workable.

 

By the way, Liberty's Highlights.  ??????

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Can anyone share thoughts on IAC?  I only casually looked at IAC previously, because ... didn't really their business, per se, so it kind of biased my level of focus.  But I come to realization that I like capital allocator, compounder type investments (ROP, Constellation, DHR, etc), and seems like IAC is one of those. 

 

Is the general idea that IAC has capable leadership in Levin (he seems like a good dude), under valued on SOTP, and are shareholder friendly?  MGM sounds atypical, but seems workable.

 

By the way, Liberty's Highlights. 

 

villainx,

I won't bore you with all the talks about market value vs. sum of parts and what you get for free with IAC. All that stuff that usually gets talked about on Barron's.

 

What I would say is that the spread between market value and sum-of-parts, needs to have a "trigger". Most conglomerates ran by self-proclaimed capital allocators have that spread. I am thinking Fairfax and Berkshire on the top of the list. However they do not have the "trigger" because the founder is an empire-builder and an asset-collector.

 

Softbank is also another example of an empire-builder where market value and sum-of-parts spread existed. However, unlike Fairfax and Berkshire, Softbank found its "trigger" when a major activist took over and also Son being humbled by WeWork and the rest of Vision Fund's poor performance. I held Softbank from the week they bought Arm Holdings in 2016, thinking they had some revolutionary plan in mind, and sold it all a week before Uber's IPO last year. Bagged 40%. Then the whole thing unravelled with WeWork and Covid-19. So to me it is AMAZING how Softbank has bounced back and its above my selling price, fuelled by a share price that was rapidly coverging toward the sum of the parts and away from the opaque structure it had. What "trigger" that was monetization of portion of Alibaba stake, off loading of Sprint-T-Mobile entity, i believe more equity sale of its once wholly owned cash cow, Softbank Mobile etc. and now a portion of ARM it seems !

 

Now on InterActive Corp. My view is that it is another conglomerate it has a market value and sum-of-parts spread narrative. BUT the beauty of IAC is that it has a "built-in" trigger. The sole reason why IAC exists is to create and enhance internet companies and offload them to the market. That is what they do and certainly showed that in spades with Expedia and Match.com. So it will always look to off load as it matures one its properties.

 

Therefore, I think, in my opinion, the market value and sum-of-parts spread narrative has a lot more potential into it for IAC when compared to Berkshire or Fairfax and many other asset-collectors. The last two are great for other reasons.

 

Not really related to the Cold War, but it reminds of a book i was reading few years ago that was covering the arms race in the 1970-80s between the two superpowers. The book was explaining that leading to the late 80s and early 90s, while both sides were great in churning out great dooms days weapons layered on top of each other, when it came to pulling down the Iron Curtain, neither side had any clue, process and understanding about to how unroll the monstrosity they have created. They only knew how to build-up ... only one way ...

 

On MGM, while i don't know the segment very well, i think it is bit smart. Think about it, they bought 10% of the company hoping that the target cooperates with them and uses the cash on hand to build their internet business. Of course  the target company could ignore all that and start a buy back program. But that would just increase the size of the position of IAC thereby its influence. Far better for the two sides think about best ways to create value.

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I don't understand why people think IAC is undervalued on SOTP.

IAC market cap is ~10.5B

Their holdings of ANGI is ~5.5B

So what do they hold that is worth another 5B?  ::)

 

Maybe not 5B, but there is more:

 

MGM: 12% of ~11B

Vimeo: Revenue $67.3M (up 47%) Q2, 2020

Care.com: IAC paid $500 million for $200 million of revenue and $20 million of EBITDA

Dotdash: $108.1M (up 60%) Q2, 2020

Search: Revenue $131.3M (down 32%) Q2, 2020

"Emerging and other": $108.1M (up 60%) Q2, 2020

Angi: Revenue $375.1M (up 9%) Q2, 2020

 

If I remember correctly the CEO has said that the stub perenially sells for zero USD...

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I don't understand why people think IAC is undervalued on SOTP.

IAC market cap is ~10.5B

Their holdings of ANGI is ~5.5B

So what do they hold that is worth another 5B?  ::)

 

Maybe not 5B, but there is more:

 

MGM: 12% of ~11B

Vimeo: Revenue $67.3M (up 47%) Q2, 2020

Care.com: IAC paid $500 million for $200 million of revenue and $20 million of EBITDA

Dotdash: $108.1M (up 60%) Q2, 2020

Search: Revenue $131.3M (down 32%) Q2, 2020

"Emerging and other": $108.1M (up 60%) Q2, 2020

Angi: Revenue $375.1M (up 9%) Q2, 2020

 

If I remember correctly the CEO has said that the stub perenially sells for zero USD...

 

"stub perenially sells for zero USD" - maybe that was true before MTCH spinoff, but it's not true now.

And yeah, I know about all these, but they are not 5B.

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So to update:

 

IAC market cap is ~10.5B

 

Their holdings of ANGI is ~5.5B

MGM holding ~1.2B

Cash/etc ~2B

Total: 8.7B

 

Odds&ends:

Vimeo: Revenue $67.3M (up 47%) Q2, 2020

Care.com: IAC paid $500 million for $200 million of revenue and $20 million of EBITDA

Dotdash: $108.1M (up 60%) Q2, 2020

Search: Revenue $131.3M (down 32%) Q2, 2020

"Emerging and other": $108.1M (up 60%) Q2, 2020

 

are valued at ~1.7B. I'd say that's high valuation.

 

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Cash at 2.9B.

 

That brings stub to under 1B?

 

So to update:

 

IAC market cap is ~10.5B

 

Their holdings of ANGI is ~5.5B

MGM holding ~1.2B

Cash/etc ~2B

Total: 8.7B

 

Odds&ends:

Vimeo: Revenue $67.3M (up 47%) Q2, 2020

Care.com: IAC paid $500 million for $200 million of revenue and $20 million of EBITDA

Dotdash: $108.1M (up 60%) Q2, 2020

Search: Revenue $131.3M (down 32%) Q2, 2020

"Emerging and other": $108.1M (up 60%) Q2, 2020

 

are valued at ~1.7B. I'd say that's high valuation.

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Cash at 2.9B.

 

That brings stub to under 1B?

 

So to update:

 

IAC market cap is ~10.5B

 

Their holdings of ANGI is ~5.5B

MGM holding ~1.2B

Cash/etc ~2B

Total: 8.7B

 

Odds&ends:

Vimeo: Revenue $67.3M (up 47%) Q2, 2020

Care.com: IAC paid $500 million for $200 million of revenue and $20 million of EBITDA

Dotdash: $108.1M (up 60%) Q2, 2020

Search: Revenue $131.3M (down 32%) Q2, 2020

"Emerging and other": $108.1M (up 60%) Q2, 2020

 

are valued at ~1.7B. I'd say that's high valuation.

 

No, cash was at 2.9B pre MGM investment. Not after it.

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I just went with there recent conference call:

 

Brandon Ridenour

 

And then just some of the housekeeping items. We own 59 million shares. We paid $1.018 billion for that. So our basis is about $17.25 or so. And we're left after that investment with $2.9 billion of cash. So don't forget to put that 59 million in your stuff -- 59 million shares in your some of the parks.

 

And then also from a housekeeping perspective, you saw in our balance sheet that was in marketable securities. In this quarter going forward, it'll be in long-term investments given our posture. And it'll be on a quarterly basis mark to market. So you'll see the ebb and flow of that investment going through the other income foreign expense line in the income statement.

 

Though I would say filings should be more definitive.

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I just went with there recent conference call:

 

Brandon Ridenour

 

And then just some of the housekeeping items. We own 59 million shares. We paid $1.018 billion for that. So our basis is about $17.25 or so. And we're left after that investment with $2.9 billion of cash. So don't forget to put that 59 million in your stuff -- 59 million shares in your some of the parks.

 

And then also from a housekeeping perspective, you saw in our balance sheet that was in marketable securities. In this quarter going forward, it'll be in long-term investments given our posture. And it'll be on a quarterly basis mark to market. So you'll see the ebb and flow of that investment going through the other income foreign expense line in the income statement.

 

Though I would say filings should be more definitive.

 

OK.  ::)

 

I don't see where they got extra $1B from, we'll have to see the fillings. Maybe they borrowed?

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From earning press release

 

As of June 30, 2020:

 IAC had 85.1 million common and Class B common shares outstanding.

 On a consolidated basis, including approximately $1.4 billion from the sale of Class M shares that were

received by IAC in early July, the Company had $4.3 billion in cash and cash equivalents, short-term investments and marketable securities, of which IAC held $3.9 billion and ANGI Homeservices held $421.0 million.

 On a consolidated basis, the Company had $240.6 million in long-term debt, all of which was held at ANGI Homeservices.

 IAC’s economic interest in ANGI Homeservices was 85.1% and IAC’s voting interest was 98.3%. IAC held 421.8 million shares of ANGI Homeservices.

 

As of August 7, 2020, IAC had approximately $2.9 billion of cash and cash equivalents, short-term investments and marketable debt securities, excluding cash held at ANGI Homeservices and excluding 59 million shares of MGM Resorts International.

 

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From earning press release

 

As of June 30, 2020:

 IAC had 85.1 million common and Class B common shares outstanding.

 On a consolidated basis, including approximately $1.4 billion from the sale of Class M shares that were

received by IAC in early July, the Company had $4.3 billion in cash and cash equivalents, short-term investments and marketable securities, of which IAC held $3.9 billion and ANGI Homeservices held $421.0 million.

 On a consolidated basis, the Company had $240.6 million in long-term debt, all of which was held at ANGI Homeservices.

 IAC’s economic interest in ANGI Homeservices was 85.1% and IAC’s voting interest was 98.3%. IAC held 421.8 million shares of ANGI Homeservices.

 

As of August 7, 2020, IAC had approximately $2.9 billion of cash and cash equivalents, short-term investments and marketable debt securities, excluding cash held at ANGI Homeservices and excluding 59 million shares of MGM Resorts International.

 

OK. Thanks. You are right then. 10Q is weird then - where the heck they had the class M shares (or cash equivalents) on it...  ::) Anyway, does not matter. Thanks for digging it up. I'll adjust above.

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With cash adjusted:

 

IAC market cap is ~10.5B

 

Their holdings of ANGI is ~5.5B

MGM holding ~1.2B

Cash/etc ~2.9B

Total: 9.6B

 

Odds&ends:

Vimeo: Revenue $67.3M (up 47%) Q2, 2020

Care.com: IAC paid $500 million for $200 million of revenue and $20 million of EBITDA

Dotdash: $108.1M (up 60%) Q2, 2020

Search: Revenue $131.3M (down 32%) Q2, 2020

"Emerging and other": $108.1M (up 60%) Q2, 2020

 

are valued at ~0.9B. OK, this is harder to value now. I'd still won't say that IAC is undervalued on SOTP, but possibly it's fairly valued.

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