IAC/InterActiveCorp (IACI): Should You Follow Luxor Capital’s Move Into Stock?

Christian Leone‘s Luxor Capital Group has disclosed a new position in IAC/InterActiveCorp (NASDAQ:IACI), as a new filing with the Securities and Exchange Commission showed. Luxor Capital reported ownership of 4.03 million shares of the company, the passive stake amassing 5.2% of the media and Internet company’s stock.

Christian Leone

Even though Luxor owns a passive stake in IAC/InterActiveCorp (NASDAQ:IACI), the fund is activist as it often changes the nature of its position after gaining a significant position. Of late, Luxor went activist on CONN’S, Inc. (NASDAQ:CONN) after gaining around 21% of the company. Luxor has been buying shares of the company for some time and before going activist and reporting holding 7.58 million shares, the fund increased its position to 5.63 million shares. Mr. Leone’s fund has also been bullish on Altisource Asset Management Corp (NYSEMKT:AAMC) and last week reported the addition of 18,325 shares, raising its activist stake to 530,805 shares, equal to 17.5% of the company’s stock. Also, a couple of weeks ago, Luxor reported adding Eclipse Resources Corp (NYSE:ECR) to its equity portfolio, holding 8.37 million shares of the company, which represent 5.2% of common stock. The stock of Eclips lost around 10% since Luxor initiated its stake and currently trades 47% lower year-to-date.

IAC/InterActiveCorp (NASDAQ:IACI) is another company whose stock lost ground since the beginning of the year, its year-to-date return amounting to around -5%. The company is engaged in several segments, such as Search, Match, Local, Media. It owns websites such as Ask.com, About.com, Dictionary.com and others. A couple of days after Luxor added the company to its equity portfolio, IAC’s subsidiary Mindspark Interactive Network announced that it has bought Apalon, one of the top developers of iOS applications.

The company’s stock has underperformed in relation to the Internet Content and Information industry, which has an average return of approximately 5%. The stock also trails a P/E of 14.00, which is significantly lower than the industry average of 61.00. Nevertheless, analysts are confident on IAC/InterActiveCorp (NASDAQ:IACI), setting a consensus target of ‘Buy’ and an average target price of $75.00. Earlier this month, Topeka Capital lowered its price target to $87 from $94, but kept its ‘Buy’ rating.

Many of the largest shareholders of IAC/InterActiveCorp (NASDAQ:IACI) have been bullish on the company as the previous round of 13F filings showed. Dan Loeb‘s Third Point initiated a stake during the second quarter, reporting ownership of 2.0 million shares in its latest 13F filing. David Einhorn‘s Greenlight Capital raised its stake by 38% during the April-June period and owns 1.88 million shares as of the end of June.

With this in mind, we shall still wait and see if Luxor keeps buying more shares of IAC/InterActiveCorp (NASDAQ:IACI) and if it eventually plan to go activist on the company. However, the bullish sentiment of analysts and several great investors should also be a signal that the company has great prospects.

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