IAC is a long-time favorite among growth-oriented value investors. Some investment thesis from this year listed here:
- Value Investors Club [02/2020]
- Value and Opportunity [08/2020]
- Greenhaven Road letter [Q2 2020]
- Maran Capital letter [Q2 2020]
- Short thesis from Kerrisdale [02/2020]
- Exposure to positive surprises/fat tail given astute stewardship.
- Net exposure has structural tailwinds (internet/online)
- Cash provides optionality on weakness.
- Diller is nearly 80
- some businesses within portfolio are permanently impaired
- Need to have a view on ANGI, since it makes up so much of marketcap.
During March lows, IAC was hit particularly hard. I luckily bought 100 shares for an effective price of about $150. This was the pre-spin, so the stake has more than doubled in about 6 months.
Post Match.com spin, the standard idea is to do a SOTP appraisal. The publicly traded pieces are relatively easy to assess. After Q2 2020, IAC has 85.1m shares out. It has
- 421.8m shares of ANGI, or 4.96 ANGI shares/IAC share. Using current prices, this accounts for about half [$60/share] of IAC’s market value.
- 59m shares of MGM, or 0.69 MGM shares/IAC share. Using current prices, this accounts for $16 of IAC’s market value.
- $2.9B in cash accounts is $34/share.
Adding up these stakes gives us $111, which is nearly equal to current prices near $120. This places zero value on IAC’s host of smaller businesses.
Depending on how values the different pieces, it is not difficult to assign a number like $2.5B to these investments, or nearly $30/share.
Adding everything together, we get estimates of $130-$150/share.