Barron’s
Art Direction: Lynne Carty
Over the past two decades, Barry Diller’s publicly traded dot-com hatchery, IAC/InterActiveCorp., has generated a higher return than Warren Buffett’s Berkshire Hathaway. Much higher, in fact. Berkshire (ticker: BRK.A), which has handily beaten the broad market over that stretch, traded recently at a price 40% above the latest accounting tally of its assets. Investors pay that “Buffett premium” as a nod to the Omaha value investor’s talent for capital allocation, and, perhaps, on a hunch that Berkshire’s assets are priced too conservatively on its books. Not all of IAC’s properties threaten to disrupt vast markets; last month, the company said it is shopping Dictionary.com and Thesaurus.com to potential buyers. But watch Vimeo, an ad-free platform for video hosting, which bought Livestream last year and launched its own live video service. Content creators can use Vimeo to make money from their videos, and to have more control over how videos are displayed, relative to, say, YouTube. Vimeo has 280 million monthly users, versus 1.6 billion for YouTube. Revenue for Vimeo is growing by about 30% a year, and could reach $150 million by next year. Other assets, including the search business Ask and the news site Daily Beast, contribute modestly to earnings before interest, taxes, depreciation, and amortization (Ebitda). Still, Vimeo and the rest could be worth $1.4 billion, reckons Cowen analyst John Blackledge.
April 2018