Post a CommentThings continue to go very well in terms of long & short trading with an average trade return over 8%. I’ve been able to avoid huge moves (the 20-25% overnight move following surprise earnings). Those can go either way of course but I prefer staying away from violent moves, it’s better for my nerves:)
As will be the case all year, my long & short stock picks will be available to see in my live spreadsheet:
http://www.intelligentspeculator.net/livetrades
You can see the numbers for both companies involved in today’s trade here:
| Ticker | Name | Price | PE Ratio | PE Next Year | Return YTD | Sales Growth | Analyst rating | Book Value | Beta | Revenue/Share | Sales 5Y Avg Growth | EPS 5Y Avg Growth |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| IACI | IAC/InterActiveCorp | 72.76 | 22.53 | 15.84 | 7.15 | 7.93 | 3.95 | 20.52 | 1.03 | 36.21 | 16.67 | N/A |
| EBAY | eBay Inc | 56.96 | 26.81 | 16.92 | 4.11 | 14.03 | 4.4 | 18.27 | 1 | 12.39 | 17.75 | 82.52 |
IAC Interactive had quite a climb in the past 2 years but it does look like the days of high growth are over for now!
IACI Revenue (Quarterly YoY Growth) data by YCharts
Long eBay (EBAY)
It’s somewhat ironic that a couple of weeks after closing a trade on eBay based partly on events that are still going on, I’m back at it. The truth is that with 6 live trades, I didn’t have as many options and while I do think there is a bit more downside on EBAY at the moment given the Carl Icahn involvement, there is also significant upside and when I was looking for the best trade options, going long EBAY was an attractive option. I continue to think eBay should be valued as a bank and that Paypal is a gem. I also think it will eventually lose much of its dominance as the competition is clearly aiming at much better products. Will that happen anytime soon? I personally don’t think so no. The payments space is incredibly attractive, features startups (Stripe, Box) but also web giants (Amazon, Google, etc) and traditional players (Mastercard, Visa, Amex, major banks, etc). It’s also a lot more complex and difficult than most of us could imagine and Paypal does have significant lock-in effect.
Next earnings release: April 29th 2014
Short IAC Interactive (IACI)
I’ve been impressed overall by the performance of IAC in the last few quarters and they have been posting solid progress both in terms of fundamentals and stock price performance. That being said, I think the comeback was expected after a fairly severe setback following the 2008-09 financial crisis for IACI. The fact is that there is very little excitement coming out of its products or properties and I don’t expect IACI to keep up with a company such as eBay that has a fast growing payments site.
Next earnings release: April 30th 2014
Disclaimer: No positions on eBay (EBAY) or IAC Interactive (IACI) but I will initiate the trade on the open today
