IAC/InterActiveCorp: Great Capital Allocator at Negative Stub Value

Elliot Turner of RGA Investment Advisors presented his in-depth investment thesis on IAC/InterActiveCorp (Nasdaq: IAC) at Wide-Moat Investing Summit 2018.

Thesis summary:

IAC/InterActiveCorp is a diverse holding company, incubator, and investor in Internet businesses created by Barry Diller. IAC trades at a discount to the value of its holdings in two publicly-traded subsidiaries (Match Group and ANGI Homeservices), implying a steeply negative market capitalization for the stub. The stub itself is a diverse mix of mature, highly cash-generative assets and young, rapidly scaling, cash-burning growth engines. The moat is derived from a culture and history of sharp business acumen, shared resources and lessons learned from building successful web companies to scale, and a sustainably lower cost of capital than competitors with a longer-term investment horizon. The stub benefits from a net cash position and should be worth, at a minimum, some number meaningfully greater than zero. IAC has several tools at its disposal to close the stub discount and will do so when the strategic timing is appropriate. Merely closing the gap would generate ~15% upside to shareholders in IAC. Meanwhile, each of the constituent parts continues to compound value, offering the potential for something far greater.

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About the instructor:

Elliot Turner is a co-founder and managing director at RGA Investment Advisors, LLC. RGA Investment Advisors runs a long-term, low turnover, growth at a reasonable price investment strategy seeking out global opportunities. Elliot focuses on discovering and analyzing long-term, high quality investment opportunities and strategic portfolio management. Prior to joining RGA, Elliot managed portfolios at at AustinWeston Asset Management LLC, Chimera Securities and T3 Capital. Elliot holds the Chartered Financial Analyst (CFA) designation as well as a Juris Doctor from Brooklyn Law School.. He also holds a Bachelor of Arts degree from Emory University where he double majored in Political Science and Philosophy.