Groove Portfolio Update

January 20, 2015 at 2:15 pm Leave a comment

Remark Media – shares of Remark have been very volatile over the last few months. After hitting a new 52 week high a few months back on the news that the company had lured away TMZ president Joshua Fruhlinger to lead the burgeoning Remark Media lifestyle offering, the stock has given much of that back. While the stock had certainly achieved an aggressive valuation based on the revenue being generated by its operating businesses, we would not be surprised to see the marketplace again start to factor in a Sharecare IPO filing, though that may have been pushed farther into the future given recent company events. Given investor enthusiasm for initial public offerings and the valuations accorded to smaller players in the only health space, we do not think it too far-fetched to consider that Sharecare will come to market with a valuation in the $1 billion+ range. At that level, Remark will own a stake valued at just under $100 million. Remark’s stock currently trades at a valuation of less than half that, so a Sharecare filing would likely bring recognition to Remark’s valuation and we could see the stock more fully reflect the value of that holding in addition to the value of the growing media business that includes IRS.com, Banks.com, Bikini.com, China ops, SlapTV and Hotelmobi’s Roomlia. It will be most interesting to see if the company decides to hold on to all of its Sharecare stake through an IPO or if they will instead choose to monetize some portion of it to fund additional acquisitions. Regardless, things have been very quiet for at Remark for long enough that we would expect to see new developments (M&A, JVs, etc.) soon.

Inuvo – shares of Inuvo have pulled back significantly over the last few weeks, even as insiders continue to buy shares and the company has seemingly been well received at its presentations at various investor conferences. We believe the malaise may be due to lack of news/catalysts and the most recent declines may be driven by concern about the issues reported by Local.com, a company with a similar business model to Inuvo. Certainly, if Inuvo were experiencing similar issues this would justify such a sell off, but we have seen nothing at this stage to suggest any negative surprises awaiting us in the Q4 report. Additionally, we note that Local.com is operating with a pretty significant debt load and operations that have not reported a profit in many quarters now vs. Inuvo’s multiple quarters of bottom line profit and rapidly diminishing debt load. Regardless of the Q4 report, Inuvo is in much better shape financially than LOCM and much better able to withstand those kinds of issues IF they are in fact part of the Q4 story.

RAVE – last week we added a third company to the GrooveVC portfolio, check out the due diligence report.

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Entry filed under: Uncategorized.

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