Australian Companies now own over 33% of Zillow class A shares
Today, two separate SC13G Fillings were made in respect of Cavalane Holdings, who filed that they own just over 3 million shares, or 9.35% in total of Zillow class A shares, and also Consolidated Press International Holdings also acquired just over 3 million Zillow Class A shares, or 9.35% of Zillow shares.
Interesting that both Cavaline Holdings and CPIH are both subsidiaries of Consolidated Press Holdings Ltd of 54 Park Street, Sydney, Australia, and that Michael Johnston signed both SC13G Filings. With a further 4.35 million shares held by another Australia company, Caledonia Investments (Private) Ltd that means that 33% of the Class A shares are held in Australia. So why would the Ozzies massively over pay for Zillow stock the way that CPH has in recent weeks? Surely they have looked at the underlying fundamentals of the business and seen how earnings are non existant, that cost of buying revenue growth is equal or higher than the revenue generated, and that the PE ratio is off the scale of common sense by any measure.
Anyone got any thoughts about what these guys know that no one else does? Surely they understand that the Class B shares held by Founders Barton and Frink give them 67.5% of the voting shares, so despite massive investment they have zero influence on running the company. Makes no sense whatsoever.
Looks like James Packer has bailed out of Zillow - or didn't file the required Sch13G by yesterdays reporting date. Largest shareholders are Australian Investment Co Caledonia Investments with 19.09%, Co-founders Barton & Frink with 11.3% and 9.3% respectively, TCV (Technology Crossover Management) with 3.0%, Citadel GP LLC with 0.5%, Wellington Management with 7.54%, T Rowe Price with 3.4% and Benchmark Capital with 0.8%.
Makes perfect sense. Z is a growth stock. It is just starting. Earnings for the next 6-8 quarters will always beat the estimates. Price will go up, people will scream "overvalued", more shorts will come in, the price will go up and shorts will cover. Nothing new here. People will always pay a premium for growth stock. Z makes money regardless of the real estate market. This is the point people keep missing. I checked with my buddy who is a real estate agent. When he said that he hates the company, I bought some more. The only reason a real estate agent would hate a company like Z, if it proved to be a danger to them.
Z will continue to revolutionize the real estate market. Wait until these guys sell "sale by owner" houses without the real estate agent. Even if they charge 1-2%, Z will be incredibly strong. This is the reason why the stock keeps going up. There will be days when Z will go up 20-30% in one day.
There is a fine divide between those who look at fundamentals and those that see Z as a niche. The investors that short this stock claim of fundamentals as there reasoning for shorting.... however they have a money losing position b/c they fail to look 2-3yrs out to 2015- 2016. Revenue for 2016 will likely be north of $400M with 30%+ EBDITA. EPS greater than $3.
The traffic on Zillow website is not that of ZYNGA, FB (teenagers, non-wage earners). They are more like the traffic of LNKD, MedScape, PCLN (Mature audience, wage earners) making an important decision wether researching for work, health, travel or buying a home. Zillow could command a higher advertisement revenue than Fb, ZYNGA for this very reason. This company will become a niche like AMZN, NFLX, EBAY, PCLN, LNKD. Zillow market cap is ONLY around $4B at current price.
I see Z hitting a market cap of $5B which would out the stock price at $125 by the end of the year (if not by end of this month).
So what was James Packer looking at when he bought Zillow at the peak? The fundamentals or the niche? Seems to me that he is sitting on a substantial loss on his Zillow investment and I am just amazed that he isn't banging on the Z boardroom table demanding representation to protect his investment. Whilst he is at it he needs to tell Spencer Rascoff it is time he stopped imposing BS Zestimates and refusing all requests to correct or delete when homeowners call Zillow out on their nonsense valuations. What value does that bring investors like James Packer when Unique User numbers have slumped over 10% since he made his investment?