What Investors Should Be Focusing On

Jonathan Boyar discusses on an interview with Yahoo Finance where he believes investors should be positioning their portfolios going forward. He also talks about the investment case for IAC.

Highlight: “Investors need to stop focusing on whether this tech sell-off is just a bump in the road… or something more,” @BoyarValue Principal & Portfolio Manager Jonathan Boyar says. “What really investors should be focusing on is what are they buying and at what price.” pic.twitter.com/1khVCNYdJc

— Yahoo Finance (@YahooFinance) September 10, 2020

Jonathan Boyar, Principal & Portfolio Manager at Boyar Asset Management, joins Yahoo Finance’s Kristin Myers to discuss his outlook on the markets and which stocks investors should be watching amid recent volatility.

Video Transcript

[00:00:11]

KRISTIN MYERS: But amid this volatility, I’m sure many are wondering which stocks they should be watching. So for more on this, we’re joined now by Jonathan Boyar, Portfolio Manager at Boyar Asset Management and Host of “The world According to Boyar” podcast. So Jonathan, I want to first start with the tech sell-off that we have seen over the last couple of days. You are saying that investors should stop worrying about whether the rally is fading and instead focus on individual stocks. I’m wondering if you can explain that thinking.

JONATHAN BOYAR: Absolutely, and first, thanks for having me. Yeah, investors really need to stop focusing on whether this tech sell-off is just a bump in the road, a chance to, you know, to buy the dip or something more. You know, in the short run, you can make a pretty convincing argument for either case. What really investors should be focusing on is what are they buying and at what price.

Right now, the major indices are extremely tech heavy and have valuations that are far from cheap. So I think for future, this is not positive for future returns. What investors should be looking for are companies outside the major indices or with low weightings in the major indices that are selling at a reasonable valuation catalysts for capital appreciation.

KRISTIN MYERS: So this idea of really looking at your portfolio and asking yourself the question, what do you own, and why do you own it? Is a common question and theme that we’ve heard, especially over the last couple of days. But you are mentioning looking at individual stocks, which I feel for most folks kind of flies in the face of that conventional wisdom, which is avoid the stock picking and just go with the indexes. So why do you think that people should instead have this sort of shift in mentality?

JONATHAN BOYAR: Well, clearly, buying the index has worked for the past 12 years. That has been the place to be. I just think it’s way overdone, and this has led, if people are just putting money into index funds, into a lot of stocks that are just being ignored, and that creates opportunities for active managers like myself.

KRISTIN MYERS: All right, well, let’s switch now to some of the stocks that you like. The first one is IAC. Talk us through your case there.

JONATHAN BOYAR: IAC is an extremely interesting company. It’s controlled by media mogul Barry Diller, who has a terrific track record of creating value for shareholders. The company is entering into a new phase. It recently fully spun out match. That was a grand slam homerun for them. Now, it’s a much more slimmed down company, and it’s really a sum of the parts play which Wall Street has a lot of trouble valuing.

They recently announced a 12% stake in MGM, the casino company. They have a large cash hoard. They also own 85% of Angie’s List, which is a company that is really leading home services, the digital revolution of home services. They own Vimeo, so they have lots of really businesses under the hood. Dotdash, which owns Investopedia, and the Street really isn’t giving us the credit it deserves.

KRISTIN MYERS: And why not, do you think? I’m looking here, you’ve got a target of 165 per share. I want to mention for everyone, IAC is actually down right now 1 and 3/4 of a percentage, 123.75 right now. How long do you think it’s going to take, excuse me, to get to 165?

JONATHAN BOYAR: We’re patient. I’m not sure how long it’s going to take, but I think it’ll get there, and I think investors could be surprised on the upside, because you’re investing in businesses like Angie that are growing rapidly, that are changing the way we’re doing business. You’re buying businesses like Vimeo, which is growing 30, 40% a year. That’s a SaaS business that they could easily spin out and get a really high multiple on. So there’s a lot of optionality here, and you got to invest alongside Barry Diller, who is one of the best capital allocators out there.

KRISTIN MYERS: What about some of the other businesses that they have in their portfolio? How do you see coronavirus impacting them, and then of course, in turn impacting IAC?

JONATHAN BOYAR: Well, Vimeo has been positively impacted in the sense that it’s a video editing production type of business, and people have been utilizing it. It’s growing 30, 40% a year. Their Dotdash business, which is online properties like Investopedia, in the long run, it’s really going to help them, because traffic is increasing, and then advertising dollars will flow to where traffic is increasing. And Angie is part of the most exciting one of all, because everyone is now stuck in their home and looking for ways to improve it. And their a problem right now, the biggest problem that Angie faces, and I had their CEO on my podcast about a month or so ago, is they have too much demand, and they can’t find service providers to meet it. So that’s a pretty good problem to have.

KRISTIN MYERS: All right, before I let you go, Jonathan, I have to ask you about stimulus negotiations. We’ve been talking about it a couple of times throughout the show, but interested in getting some of your thoughts. The markets had largely baked in that we would be getting a deal. The prospect of a deal, however, at least in my estimation, seems to be fading with each passing week, whereas Congress remains in a stalemate. So I guess, one, do you think we’re going to be getting some sort of stimulus package? And two, what do you think happens if we don’t get one?

JONATHAN BOYAR: In terms of the stimulus package, I hope we get one, because I think it’s the right thing to do. Will we get one? I have absolutely no idea, but one of the things that I’ve learned is you have to ignore the noise, and you have to focus on the long term. In the long run, everything here will be fine, and things will get resolved, whether it’s resolved a month from now or two months from now or after the election is anyone’s guess. So you just have to look at things on a company by company basis and look for companies that are going to be survivors and you just can’t focus on the timing.

KRISTIN MYERS: All right, we will have to leave that there. Jonathan Boyar, Portfolio Manager at Boyar Asset Management, thanks so much for joining us today.

JONATHAN BOYAR: Thanks for having me.