IPO Of The Dating App Everyone Isn’t Talking About

Young people can’t stop chattering about the dating app Tinder these days, an idiotically simple interface that presents a face on your smart phone and invites you to accept or reject it, based on which way you swipe. From Tinder’s FAQ page:

I accidentally left-swiped someone, how do I get them back?

You can't, you only swipe once, Tinder on!

The app won Best New Startup of 2013 from TechCrunch and seems a particular obsession of young writers on Huffington Post.

How Tinder comes by the faces a user sees – from their Facebook (FB) accounts, and the looker designates a geographic area – is almost beside the point. The looking and swiping – yes, yes, no, no, no – is said to be addictive. If you see a young person swiping away at his or her phone on the subway or bus or walking along, there’s an excellent chance it’s Tinder.

Which would seem to cast a pall over the planned IPO of Zoosk, another online dating company and app whose interface is nearly as crude and addictive – but not quite. It will be fun to see if the underwriters, led by Bank of America Merrill Lynch (BAC), Citigroup (C) and RBC Capital Markets can get Zoosk the $100 million it wants in the offering. Especially in this iffy market, colored by steep declines in consumer-ish tech stocks like Yelp (YELP), HomeAway (AWAY), Netflix (NFLX), TripAdvisor (TRIP) and Pandora (P).

YELP Chart

YELP data by YCharts

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Why Oakmark Buys Franklin Resources Stock:

The news that TIAA-CREF is paying $6.25 billion for Nuveen Investments, a mid level asset manager specializing in municipal bonds, is merely a break even proposition for the private equity firm that bought Nuveen at the 2007 market top. Public asset managers Blackrock (BLK), T. Rowe Price Group (TROW), Invesco (IVZ) and Franklin Resources (BEN) managed to deliver a bit more for shareholders from the October 2007 peak, with BlackRock the true standout:

BLK Total Return Price Chart

BLK Total Return Price data by YCharts

From a valuation standpoint, it’s Franklin Resources that looks most compelling right now. The umbrella firm includes the mega Franklin bond fund operation, the Templeton international fund shop and the equity value funds from Mutual Series. Here’s Enterprise Value/EBITDA:

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YCharts Research: Man-Trouble At Kohl’s

The latest YCharts 1% Focus Report covering suburban retail chain Kohl's (KSS) is available for download.

As in all our Focus Reports, the report on Kohl's features an intrinsic value range estimate for the company. The calculations for this range are objective, transparent, data driven, and based on the analysis of the valuation drivers detailed in the rest of the report.

Here is an excerpt...

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If Airbnb’s Worth $10B, HomeAway’s A Bargain

News earlier this month that Airbnb had arranged a funding round of as much as $500 million, valuing the company at about $10 billion, seemed like good news for couch owners everywhere. This informal renting out of one’s couch, extra bedroom or entire apartment must really be taking off, eh?

It’s a shame Airbnb remains privately-held and we therefore can’t get a look at the financial results to date.

The Wall Street Journal reported that Airbnb had 2013 revenue of about $250 million and the company’s web site says it holds more than 600,000 listings. We also learn from Airbnb’s site that listing your pad is free, so no telling how many of those listings generate revenue or how much; the company only makes money if someone rents out whatever accommodation you’re offering – 3% of the rental amount from you, and 6%-to-12% of the rental amount from the renter.

Fair enough. Certainly, if every back bedroom on earth joins the listings – or every empty apartment, or every apartment someone is willing to vacate for a while – the business could grow quite large, and the $10 billion valuation against $250 million in revenue won’t look so crazy. Smart names like TPG, T. Rowe Price (TROW) and Sequoia Capital – among the latest round’s investors – apparently see big things ahead.

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From Oakmark’s Market Beaters: Value + Income

The $13 billion value-centric Oakmark mutual fund is showing no signs of let up. Its 27% gain over the past year is six percentage points ahead of the S&P 500. The fund owned 59 stocks at the end of the first quarter, but plenty of the heavy lifting has come from five of the top 10 holdings clocking gains of more than 35% over the past year, led by TE Connectivity (TEL) and DirecTV (DTV):

BAC Chart

BAC data by YCharts

For the unfamiliar, managers Bill Nygren and Kevin Grant have delivered long-term as well. The fund’s near 9% annualized gain over the past 10 years is 1.5 percentage points better than the S&P 500. The managers’ stock picking acumen actually bested the index by about 2.5 percentage points over that stretch. It’s just that fund returns are net of expenses, and the Oakmark Fund charges a very pricey 0.95% for such a large portfolio.

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Hertz: A Spin-Off Away From Stock Gains?

The old “We Try Harder” advertising slogan belongs to Avis, famously the struggling No. 2 in car rental, and now known as Avis Budget Group (CAR). But the car rental player trying harder to catch up these days is Hertz (HTZ), the long-time No. 1, which has seen its stock languish over the past year.

HTZ Chart

HTZ data by YCharts

On a forward PE ratio basis, Hertz is getting no respect.

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Why Top Value Fund Managers Are Buying eBay

Even after tech’s roller coaster ride over the past month, no one is going to mistake the likes of Facebook (FB) or Twitter (TWTR) for growth stocks that a value investor could love. But eBay (EBAY) increasingly fills that intriguing bill. Revenue has nearly doubled over the past five years. Granted that’s about one-third the pace of revenue-crazed Amazon (AMZN), but then again, eBay actually manages to churn out earnings growth along with its none too shabby revenue growth:

EBAY EPS Diluted (TTM) Chart

EBAY EPS Diluted (TTM) data by YCharts

And eBay has been showing up in some interesting value spots. Morningstar says that eBay currently sells at near a 15% discount to Morningstar’s (MORN) estimate of fair value. Add in the fact that eBay is also one of the rare stocks covered by Morningstar to earn a coveted wide moat rating, and you’ve got yourself an interesting stock for these times: a global firm (52% of 2013 revenue came from international markets) with an enduring competitive advantage that happens to sell at a decent discount in a market that doesn’t.

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An Earnings Season About Earnings For A Change?

We’re being pushed into earnings season ahead of an ugly market, down a big chunk again as we write this. And along with biotech highflyers, we’re told the culprits are tech stocks. True enough, some glitzy tech names are down hard since March 5: Yelp (YELP) and its tenuous business model; Netflix (NFLX), Twitter (TWTR), Pandora (P) and Workday (WDAY).

NFLX Chart

NFLX data by YCharts

These and some larger-capitalization tech names have traded in recent memory on revenue growth, suggesting we should call periods such as now revenue season instead of earnings season. But when one focuses instead on earnings – and companies that trade at least partially on that benchmark – it turns out tech shares are doing pretty well right now.

In the next two charts, we’ll look at the 10 biggest market cap tech names in the U.S. – Apple (AAPL), Google (GOOGL), Microsoft (MSFT), International Business Machines (IBM), Oracle (ORCL), Facebook (FB), Amazon (AMZN), Qualcomm (QCOM), Intel (INTC) and Cisco (CSCO).

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Midcaps With a Dividend Kicker: Beats S&P 500

After falling more than 5% early in the year, the SPDR S&P 500 ETF (SPY) clawed its way back to end the first quarter up more than 1.5%.

While the large caps by definition get the bulk of investor attention, their smaller siblings showed them up in the first quarter. The 5% total return for the WisdomTree MidCap Dividend ETF (DON) was two percentage points ahead of the SPDR S&P 500’s performance, which also lagged the rise in two other midcap portfolios:

IJH Total Return Price Chart

IJH Total Return Price data by YCharts

The WisdomTree Dividend ETF offers an interesting way to invest in midcap stocks. Given that most midcaps are not (yet) behemoths with defensible wide moats you have to expect they are going to be more volatile. Nothing wrong with that. But focusing on midcap stocks that are mature and flush enough to pay a dividend gives you a dollop of risk-dampening. And since the 2009 market bottom that hasn’t translated into having to concede upside potential:

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Reality Vs. Buzzwords at Shutterstock, Down 31%

Some fabulous companies have seen their stocks pounded by the selloff of technology, biotech and other momentum shares in recent weeks, and Shutterstock (SSTK) is one of them. The company is growing rapidly, solidly profitable and has built what it likely a durable business model with its online marketplace for photographs, video and other images.

Does that mean the selloff makes no sense? Hardly, for while Shutterstock is a dandy business, it is a relatively little one and its valuation, even after a 31% plunge, suggests that investors bought into the notion of spectacular and sustained growth not often seen as a company matures. The Shutterstock PE ratio has fallen to about 93.

SSTK PE Ratio (TTM) Chart

SSTK PE Ratio (TTM) data by YCharts

The $2.5 billion market cap is supported by reported 2013 revenue of just $235 million and net income of $26 million. Great business, questionable multiple.

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