IACI: Diller's Dollars
02/06/2004 12:00 am EST
"More than half your holdings should be in big, well-established firms," says Michael Sivy’s Money Portfolio Advisor Plus. "But it’s also worthwhile to include some more aggressive growth stocks to add a little zing to your returns." He suggests Internet player, InterActive.
"InterActive Corp (IACI NASDAQ) is an exceptional collection of e-commerce businesses assembled by CEO Barry Diller. I don’t normally consider Internet stocks since they tend to be overvalued and are way outside my risk parameters. But if I wanted to take a flier on a real aggressive growth stock, InterActive would be one of my top picks. The company has a great mix of businesses, a legendary CEO and, best of all, real earnings. When Vivendi Universal began to unravel, Diller was one of the few insiders to get out in good shape. Essentially, he walked away with the foundering media company’s online businesses, and has since added to them. Currently, InterActive includes the HSN home-shopping network, the Expedia travel site, Ticketmaster, online dating service Match.com, and lots of other sites.
"There are plenty of caveats with a stock like this. Competition from sites like Orbitz and Travelocity is fierce. Earnings, although real, are hard to pin down. Unpleasant accounting surprises are entirely possible. And all Internet stocks are wildly volatile. On the plus side, though, InterActive’s divisions have real profit-making business plans. And Diller has a notable record of coming out ahead even in disastrous situations. Over the past year, the stock has swung from $20 to $40 — and there’s no way of knowing at what price to buy it. But it makes a lot of sense to buy some shares, hang on, and see where the price goes. History shows it’s smarter to bet on Diller than against him."