We're posting up notes from the 2014 Value Investing Congress in New York. Next up is Andrew Left of Citron Research who presented a short of "Zulia", or the combined Zillow / Trulia entity.
Andrew Left's Value Investing Congress Presentation
Shortselling in general: "I keep Xanax in business"
Shortselling in general: two types, when you need something to change vs. when you need things to stay the same (time on your side). Z is in the latter camp.
Big disconnect between the reality of the residential real estate market (people driven; agents don't differentiate b/n various listing services) vs. the Wall Street hype.
Business model is providing commodity information (listings) that they do not own and selling the advertising space next to it to agents. Paying agents also block other agents from being displayed on the side of the paying agent's listing. 65% of revenue is agents paying, 25% is display ads, 10% mortgage-related. Agents don't like the business model at all.
The fundamental problem with Zulia is that the total addressable market ("TAM") is considerably smaller than commonly believed.
Based on Citron research and certain disclosures, about 40% of the inventory is unavailable for sale.
Zillow's low-value "deals" with Douglas Elliman and ReMax are known but they also appear to have special terms with larger regional firms and Keller Williams. Deals indicative that Z provide little to no value to its customers.
These corporate deals make the full-price clients very upset; also Z has been reducing the number of protected listings a paying agent might have.
Price target $22.50 based on comps, $42 based on a stable leadgen EBITDA business.
Q&A: Compared to the Australian counterparts, Z has no real IP.
Q&A: Long idea BBRY. Internet of things play/secure mobile data transmission. CEO superstar. Handsets no longer a deciding factor. IBM/Apple partnership to enter space validates BBRY's business.
Be sure to check out the rest of the Value Investing Congress presentations here.
Wednesday, September 10, 2014
Andrew Left's Value Investing Congress Presentation: Short Zillow/Trulia
Wednesday, July 31, 2013
What We're Reading ~ Analytical Links 7/31/13
Inflationistas and the global supply shock [FT Alphaville]
Equity long short funds: do they provide return-free risk? [Reformed Broker]
Is Caterpillar (CAT) nothing but the Dow's most overpriced dog? [ZeroHedge]
Interview with the 2013 Ira Sohn Contest winner [Santangels Review]
Thoughts from the Valuex Vail Conference [Institutional Investor]
A dozen things I've learned from Seth Klarman [25iq]
You don't know as much about bonds as you think you do [Term Sheet]
The hardware revolution is upon us and why it matters [True Ventures]
A pitch on Cedar Fair (FUN) [Broyhill]
The irrelevance of Microsoft (MSFT) [Benedict Evans]
Why online consumers love Zillow and Trulia [Realtynex]
The cult of home ownership is dangerous [FT]
Goodbye mail carrier, hello cluster mailboxes [CNN]
Wednesday, March 20, 2013
What We're Reading ~ Analytical Links 3/20/13
What matters more in decisions: analysis or process? [Farnam Street]
The stock market and the economy are two very different animals [Abnormal Returns]
One of the most sentiment-driven rallies ever [Reformed Broker]
A pitch on retailer Coach (COH) [Old School Value]
Walt Disney (DIS): Can ESPN sustain its fee subscriber growth? [Trefis]
A small investors' guide to activist investing [Fool]
When will interest rates rise? [LearnBonds]
Technical tools for helping to identify possible market tops and bottoms [Chris Perruna]
Confirmation bias and the importance of asking "why might I be wrong?" [Incblot]
Why Redfin, Zillow (Z) and Trulia (TRLA) haven't killed off real estate brokers [BW]
This is the future of TV [Quartz]
Is it time to short Canada? [Bonddad]
How to beat Amazon (AMZN), Best Buy (BBY) edition [WSJ]
The scariest statistic about the newspaper business today [The Atlantic]
Short sellers flee the scene [WSJ]
10 signs stocks are about to tumble [Marketwatch]
Should investors be on Twitter? [Felix Salmon]
March madness analytics: blind bracket tool [WSJ]
