Ziff Davis 🇺🇸
NASDAQ: ZD • EV: $2.0B • Last Close: $36.27
Ziff Davis is a conglomerate of niche digital media brands, think CNET, PCMag, RetailMeNot, IGN, and many others. AI is changing how people interact with the internet, especially publishing/content businesses. Investors have not taken kindly to this development with Ziff Davis down over 70% since their 2021 high.
“From 2012 through 2024, we have deployed approximately $3.3 billion on more than 90 acquisitions.”
- Ziff Davis, 2024 10K
This is a no growth business absent M&A. Management targets 20% cash-on-cash returns which roughly checks out with their current EBITDA/cumulative invested capital of 16%. Today shares trade for 5x FCF with only 14% of their traffic coming from search. Furthermore, as shares have come down management has leaned further into their buyback. They’ve also broke out reporting into 5 segments to help highlight the value disconnect.
Trainline PLC 🇬🇧
LON: TRN • EV: USD $1.3B • Last Close: £2.15
Trainline operates the leading digital platform for train and bus tickets in the EU/UK. The stock is under pressure this year due to regularity uncertainty in the UK. Government owned Great British Railways launching their own ticketing app and Google remain threats as well.
As for the good, online rail ticket penetration is well below other verticals like food delivery and airlines. This along with increasing carrier competition make for nice tailwinds, while low take rates and significant complexity (there are 26,000+ rail stations in the EU) make barriers to entry high.
They should do around USD $160M of FCF this year, all of which is going towards share buybacks.
Shriro Holdings 🇦🇺
ASX: SHM • EV: USD $32M • Last Close: $0.80
Shriro Holdings is an Australian wholesaler of home appliances and consumer electronics. They distribute everything from ovens to calculators via 2 company owned distribution centers.
Management is shareholder friendly and own a good amount of stock. They’ve been smart about trimming underperforming segments and after failing to find any suitable acquisition targets have instead turned to share buybacks and dividends.
Shares trade for ~5x FCF net of cash. Not bad for a consistently profitable company putting up an average ROIC in the 20% range.
A Writeup from Acid Investments (Link).
Disclosure: This newsletter does not provide investment advice. Information presented is for informational purposes only and should not be considered a recommendation to buy or sell securities. The author may or may not own the securities discussed.