Is it Still Worthy to Invest in IAC/InterActiveCorp (IAC)?

·3 min read

Alphyn Capital Management, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. A quarterly portfolio net return of 3.9% was recorded by the fund for the fourth quarter of 2021, and a 13.9% return for the past year, while its S&P 500 TR benchmark delivered a 28.7% return in 2021. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

Alphyn Capital Management, in its Q4 2021 investor letter, mentioned IAC/InterActiveCorp (NASDAQ: IAC) and discussed its stance on the firm. IAC/InterActiveCorp is a New York, New York-based media company with an $11.1 billion market capitalization. IAC delivered a -4.59% return since the beginning of the year, while its 12-month returns are down by -11.79%. The stock closed at $124.71 per share on January 27, 2022.

Here is what Alphyn Capital Management has to say about IAC/InterActiveCorp in its Q4 2021 investor letter:

"IAC’s strategy is to direct resources opportunistically behind portfolio companies demonstrating traction, in the form of funding and managerial talent, frequently using cash flow from slower growing but profitable subsidiaries to fund fast growers. It typically spins them out, once sufficiently developed, as separate public companies. This "anti-conglomerate" strategy, as Barry Diller has described it, catalyzes the partial elimination of a Holdco discount with each separation. For example, when SAAS companies commanded very high multiples last year, IAC accepted venture investment on attractive terms ahead of spinning out Vimeo.

IAC capitalized on DotDash’s recent solid revenue growth and margin expansion this year by purchasing Meredith for $2.7bn in cash. At first, I worried that buying an old-school print media business was a step backward. However, after listening to the deal presentation, I became more encouraged by the company’s rationale. Meredith has strong brands and extensive independent content, which allows it to monetize its long-standing relationships with advertisers through premium display advertising. DotDash, on the other hand, owns challenger brands but has better optimized its content for the online world. For example, it performs better on high-yielding performance marketing (converting clicks directly into purchases/transactions). In addition, it has fast-loading sites with good user interfaces (which dramatically improves ad effectiveness). With the significant overlap between DotDash and Meredith in the home, food, health, beauty, and travel sectors, IAC sees the opportunity to take leadership positions in these categories and significantly ramp up online advertising performance. From this perspective, the plan is in keeping with IAC’s long-standing core strategy of investing in offline-to-online transitions. Sometimes the “guy on the ground’s” situational context enables them to see better opportunities than we can as passive investors."

Our calculations show that IAC/InterActiveCorp (NASDAQ: IAC) failed to obtain a mark on our list of the 30 Most Popular Stocks Among Hedge Funds. IAC was in 47 hedge fund portfolios at the end of the third quarter of 2021, compared to 50 funds in the previous quarter. IAC/InterActiveCorp (NASDAQ: IAC) delivered a -19.02% return in the past 3 months.

In December 2021, we also shared another hedge fund’s views on IAC in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.

Disclosure: None. This article is originally published at Insider Monkey.