IAC/InterActiveCorp: Well-Managed Holding Company at SOTP Discount

David Marcus of Evermore Global Advisors discussed his approach to investing in special situations in family-controlled companies at Best Ideas 2022. He also presented his investment thesis on IAC/InterActiveCorp (US: IAC).

Thesis summary:

IAC/InterActiveCorp was formed in 1995 when Barry Diller took a controlling stake in Silver King Communications, an owner of twelve UHF television stations. Since then, the entity has followed a tried-and-true playbook for its portfolio companies — buy, build, scale, and ultimately spinoff. Eleven public companies have emerged from IAC, including Expedia (EXPE) and, more recently, Match Holdings (MTCH) in July 2020 and Vimeo (VMEO) in May 2021.

Today, IAC is comprised of category-leading businesses, including Angi Inc. (ANGI), Dotdash Meredith, and Care.com, among many others, ranging from early-stage to established businesses.

Management are proven value creators and are well-aligned with shareholder interests; Diller and CEO Joey Levin both own a substantial amount of IAC stock and long-term management incentive compensation is largely tied to the performance of the shares.

IAC continues to trade at a substantial discount to the sum of its parts, which should continue to compound over time. At a recent $130 per share there is ~50% upside to David’s ~$200 per share sum-of-the-parts value estimate.

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About the instructor:

David Marcus has more than 20 years of experience in the investment management business. He began his career at Mutual Series Funds, mentored by renowned value investor Michael Price, and rose to manage the Mutual European Fund and co-manage the Mutual Shares and Mutual Discovery Funds. He also served as director of European Investments for Franklin Mutual Advisors, LLC.

After leaving Franklin Mutual, David founded Marcstone Capital Management, LP, a long-short Europe-focused equity manager, largely funded by Swedish financier Jan Stenbeck. When Mr. Stenbeck passed away in 2002, David closed Marcstone and then co-founded a family office for the Stenbeck family; as an advisor to the family, he advised on the restructuring of a number of the public and private companies the family controlled.

He later founded and served as managing partner of MarCap Investors LP, the investment manager of a European small cap special situations fund, which he managed from 2004 to 2009.