Led by media mogul Barry Diller, IAC/InterActiveCorp. (IAC) operates as a holding company for stakes in several major media and internet companies, including HomeAdvisor and Dictionary, explains Jim Osman, editor of The Edge's Spinoff Report Lite.
The company operates in four main segments: HomeAdvisor, Video (Electus, CollegeHumor, Notional, IAC Films and Daily Burn), Applications (Consumer, Apalon and Slimware) and Publishing (Premium Brands and Ask & Other).
In the past two years alone, the company has Spun off its stake in Match Group, Inc. (MTCH) and the entirety of Vimeo Holdings (VMEO).
Original Thesis: We have long been positive on the value creation strategies employed by Barry Diller and IAC, specifically the incubation of nascent companies and Spinning them off onto the market when they’re able to stand independently. Diller has a long history of outperformance through these Spinoffs, and MTCH and VMEO are only the most recent examples (with many more in the years to come).
Developments: The separation of VMEO falls in line with Barry Diller and the management’s long history of separating businesses once they have achieved appropriate scale and maturity.
With $2.7 billion of net cash, this Spinoff helps IAC to now focus on building the scale of its remaining businesses and improve their respective alignments. Post-Spin, IAC will operate via:
(i) its 84.1% ownership in ANGI Homeservices (ANGI), a NASDAQ listed internet services company creating a digital marketplace for home services
(ii) Dotdash, a digital media company with a portfolio of digital publishing brands
(iii) Search, which consists of Ask Media Group (a collection of websites providing search services) and
(iv) Emerging & Other, which consists of Care.com (the leading online destination in search for caregivers, tutoring, pet care, etc. — acquired in Feb 2020), NurseFly (a platform to connect healthcare professionals with job opportunities – acquired on June 26, 2019) Mosaic Group (leading developer and provider of global subscription mobile applications), Bluecrew (technology driven staffing platform exclusively for flexible W-2 work), The Daily Beast and IAC Films. IAC is also holds a 12% interest in MGM Resorts International (MGM).
IAC is the largest shareholder (previously investing $250m in 2019, with the right to increase its ownership over time) in a car rental company called Turo, where private car owners can list their vehicles for rent or referred to as the “Airbnb for cars.”
With IAC’s CEO (Joey Levin) currently on the board of Turo and after having their first-ever profitable quarter through spending cuts during the pandemic, Turo is now eyeing to list on the market in 2021.
Recommendation: The stock, selected as our Top Pick at the start of 2021, is up 26% year-to-date. For new medium/long-term investors, we recommend holding IAC for +54% Base case upside. New investors should enter IAC for further mid-term catalysts ahead.
