A Cheap Stock Trading at 70% of Asset Value

Trades at a market cap of $3.7 billion, but when I tally up what it actually owns, I get over $5 billion in value.

If you've followed my newsletter for a while, you know I get excited about buying dollar bills for 70 cents – and I believe IAC continues to be exactly that kind of opportunity, even if the market hasn't recognized it yet.

Unfortunately, I've held a position in IAC for about two years now, and it's been a frustrating ride to say the least. The stock has significantly underperformed my expectations, testing my patience as a value investor. I've watched it drift lower while questioning my thesis at every turn.

But despite these disappointing results, I find myself not only holding but seriously considering increasing my position ahead of the upcoming Angi spinoff.

Why double down on a losing investment?

Because I can't shake the conviction that we're looking at one of those rare situations where the market is missing something obvious. The gap between price and value has only widened, making the opportunity more compelling, not less.

This "anti-conglomerate" currently trades at a market cap of $3.7 billion, but when I tally up what it actually owns, I get over $5 billion in value.

That's more than 30% upside just by the market recognizing what's already there. And with IAC trading about 75% below its 2021 peak, there's a compelling recovery story brewing alongside this valuation gap.

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The Diller Playbook

First, let's talk about what IAC actually is. This is Barry Diller's incubator – a company that builds digital businesses, grows them, and then spins them off once they've matured. Founded in the early 1990s as Silver King Communications (later USA Networks), IAC has evolved into one of the most successful internet conglomerates that most investors have never fully understood.

The company's "build, spin, repeat" playbook has created tremendous value over the decades. They identify promising digital business models, provide capital and operational expertise to scale them, and then spin them off as independent public companies once they reach sufficient scale.

They've done this nine times before with tremendous success – Match Group, Expedia, LendingTree, Ticketmaster, TripAdvisor, and others have all emerged from the IAC ecosystem. In fact, if you had invested in IAC and held all the spinoffs, your returns would have outperformed the market over any meaningful time period.

What makes IAC different from a traditional holding company is their active operational involvement. They're not just passive investors; they build these businesses from the ground up or transform them after acquisition. Now, they're about to execute their tenth spinoff with Angi, their home services marketplace that connects homeowners with quality professionals for home improvement and maintenance projects.

Valuation: SOTP (sum-of-the-parts)

When I run the numbers on what IAC owns today, it's genuinely puzzling why the market values it so cheaply: