As Scott Miller of Greenhaven Road writes in his Q2 2020 letter, sell-side estimates put the value of IAC’s holdings at $150+ per share. IAC has always traded at a discount to sum-of-parts, and this discount is shallower than it has been in the past (when the non-ANGI/MTCH holdings actually had a negative implied value), I’m not so concerned with the exact level of the discount. I’m more curious why there is a discount at all, given IAC’s history of returning businesses to shareholders through spinoffs, which should imply no discount.

Buffett says he’ll repurchase BRK shares at 1.2x book (he said something along these lines, not exactly sure what), and BRK usually trades well above book, despite sitting on a massive cash pile that hasn’t been deployed at all. It confuses me that IAC trades below NAV when it has a history of not sitting on cash and continuously shrinking through spinoffs to keep the capital base smaller. IAC has compounded capital at higher rates than BRK since 1995.

Right now, $44.81 of IAC’s NAV per share is in cash. The remaining majority is the ANGI stake. Thus, IAC right now is really a bet on Barry Diller and Joey Levin’s ability to deploy this cash well. Levin has said they expect to do a deal by the end of this year. History suggests they’ll deploy this capital wisely, and the discount to NAV provides some margin of safety.

IAC also rides the offline to online megatrend. They know consumer internet, and marketplaces in particular, better than anyone else, and this online marketplace trend is one I expect to continue over the next 10-20 years.

My concern is that they’re finance people running tech businesses. They probably don’t have the same level of product vision as a founder (I like founder-led companies) and are focused on financials. However, their record in the internet space for the last 20 years suggests that they know what they’re doing.