CEO of holding company behind Vimeo, Daily Beast shares why he thinks it's undervalued
- CNBC’s Jim Cramer and IAC CEO Joey Levin get to the heart of why Wall Street tends to undervalue the diversified holding company.
- IAC, also known as InterActive Corp., is behind Vimeo, CollegeHumor, and owns the majority of Tinder parent Match Group.
- Levin says IAC doesn’t get enough credit for acting like an “anti-conglomerate” for the benefit of its shareholders.
IAC/InterActive Corp., the holding company behind Vimeo, CollegeHumor, The Daily Beast and a host of other brands, is chronically undervalued by Wall Street despite its efforts to reward investors, CEO Joey Levin said Thursday on CNBC.
Between its majority stakes in two of its now-public former subsidiaries — Tinder parent Match Group and Angie’s List parent ANGI Homeservices — and its cash hoard, IAC’s total value “usually adds up to something more than [its] market cap,” Levin told CNBC’s Jim Cramer in a “Mad Money” interview.
At the end of Thursday’s trading session, Match Group’s market cap was around $15.5 billion and ANGI’s was roughly $8.5 billion. Just taking into account IAC’s 81.1 percent and 83.9 stakes in each company, respectively, and the $1.7 billion in cash on its balance sheet, that adds up to roughly $21.4 billion — well above IAC’s current $18 billion market cap.
“I think [at] any multi-business business, there are reasons that investors give them a discount,” Levin said on Thursday, adding that some might think “they’ll never get access to the cash flow” because the company is so multifaceted.
But according to Levin, who has been CEO since 2015, IAC has “a history of repurchasing shares, we have a history of paying dividends, things like that, so we generally, I think, should get credit for that,” he told Cramer.
People also worry that because IAC is made up of so many different businesses, they might have to pay higher taxes on its stock, which tends to happen with conglomerates because their businesses are taxed separately.
Levin’s response? “We’ve done a number of spin-offs. We’ve distributed shares tax-free,” he said. “Most of the things we do, we try and avoid those conglomerate discount things and we really try and act like an anti-conglomerate.”
The CEO added that IAC’s management has spotted an encouraging new trend in the last year among company’s individual businesses, which also include publishing company Dotdash and fitness platform DailyBurn.
“We’ve been fortunate to have each of our businesses — really in the last year, in a way we’d never seen before — … individually growing, and each of them still single-digit-penetrated in huge markets,” Levin said. “Take ANGI Homeservices. It’s a $400 billion market, and we have single-digit penetration in there and a lead, a pretty substantial lead relative to the next folks.”
Shares of IAC climbed 4.41 percent in Thursday’s trading session, closing at $215.93. Match Group’s stock hit a 52-week high after earnings. ANGI Homeservices lost nearly 4 percent in after-hours trading on the heels of its earnings report after gaining more than 2 percent intraday.
Watch Joey Levin's full interview here:
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