Bireme Capital is a long-short value fund founded in 2016 by Ryan Ballentine (CEO) and Evan Tindell (CIO), based in Tampa, Florida. Its flagship Fundamental Value strategy runs bottom-up, contrarian deep-value investing that exploits behavioral biases and structural mispricings.
This report looks at Ziff Davis, a company that buys struggling websites (like Mashable) at a discount, then cuts costs to make them profitable. The stock is down nearly 50% since 2021 and trades at just 11 times earnings, but the report argues the market is undervaluing its proven acquisition strategy. For example, Ziff bought Mashable for $50 million in 2017, and it now generates an estimated $20-25 million in annual profit. The report compares Ziff to other successful acquirers like Transdigm and Constellation Software, noting its returns are competitive yet its valuation is much lower. Worth reading for a clear, case-study-driven look at a potential bargain.
This report analyzes the investment value of Ziff Davis (ZD), with the core view that its current stock price is undervalued. The report points out that since 2014, ZD has acquired underperforming websites at low prices (such as acquiring Mashable, once valued at $250 million, for $50 million, and a
This chapter explores the investment value of Ziff Davis (ZD), set against the backdrop of its stock price having fallen nearly 50% since November 2021, with current valuations at historically low levels. ZD is a company that builds its digital media and health information business by acquiring and integrating underperforming website assets.
The core argument of the report is that ZD's current stock price is significantly undervalued, and its unique "buy cheap, optimize costs" business model is mispriced by the market. A counterintuitive judgment is that, although ZD drives growth by acquiring low-profitability assets and aggressively cutting costs, its return on capital is superior to some well-known acquisition-and-integration companies, yet its valuation is far below theirs.
1. Valuation Level: ZD currently has a market cap of approximately $3.4 billion, a P/E ratio of about 11x, and an enterprise value/EBITDA multiple of less than 7x, which is considered a fairly conservative valuation.
2. Growth Record: Since 2014, the revenue of its portfolio of website assets has grown sixfold.
3. Acquisition Cases and Integration Results:
4. Historical Acquisition Valuation and Capital Return: ZD claims that its average acquisition valuation is about 5x EBITDA. Based on consolidated financial statements, after deducting approximately $750 million in cash, its roughly $2.75 billion in operating assets (almost entirely from acquisitions) represent about 5.2x this year's expected EBITDA, supporting this claim. Accordingly, its EBITDA return on invested capital (ROIC) is approximately 20%.
5. Peer Comparison: The report compares ZD's business model to Constellation Software (niche SaaS) and Transdigm (aircraft components). Although ZD's EBITDA ROIC (around 20%) is lower than Constellation's (nearly 50%), it is better than Transdigm's (about 15%). Yet, its valuation multiple is only half of Transdigm's.
| Comparison Dimension | Ziff Davis (ZD) | Transdigm (TDG) | Constellation Software |
|---|---|---|---|
| Business Model | Acquire and integrate underperforming websites | Acquire and integrate aircraft components | Acquire and integrate niche market SaaS software |
| EBITDA ROIC | Approximately 20% | Approximately 15% | Nearly 50% |
| Valuation Multiple (EBITDA) | < 7x | Approximately twice ZD's | Not explicitly stated, but typically high |
For investors, ZD represents a potential investment opportunity: a company with a verifiable track record of successful acquisition integration, competitive capital returns, but a current valuation significantly below peer companies. Investors should focus on the valuation discipline of its future acquisition transactions (whether it can still maintain the roughly 5x EBITDA level) and whether the operational efficiency of its existing asset portfolio can be sustained. The report's author has placed it on a watchlist and plans to track it closely.