Here’s the beginning of the latest teaser pitch from the Eagle Financial folks…

“There is a company that doesn’t make or sell anything—yet, it earns over $3 billion a year.

“It occupies this futuristic-looking building (its world headquarters) in the heart of New York City.

“And it’s been turning ordinary investors into multi-millionaires.”

And, actually, that’s enough to get our solution… because, as anyone who spends any time in New York city will know, that “futuristic looking building” in Manhattan that they include a photo of in the presentation is, in fact even named after this “secret” company.

Here’s a photo of it that I pulled separately, in case you want to use that to jump to your own conclusion right away…

But we’re just getting started, I don’t want to spoil the surprise for those who haven’t strolled around Chelsea in the last decade, or who aren’t architecture buffs… and we want to know what makes this company such a “no joke” compelling idea for Jim Woods, who is using this idea as bait to hook new subscribers to his Intelligence Report (that’s a longstanding investment newsletter formerly edited by Richard Young, Woods took it over a couple years ago — currently charting $99/yr for the basic subscription).

What else do we hear about this investment? Here’s a taste:

“This very strange 33-year-old company doesn’t make or sell anything! Yet, year-after-year, it earns over $3 billion (over $4 billion last year)!

“Join investors who are doubling their money every year—9X-ing the S&P 500—and 3X-ing the entire tech sector!

“You owe it to yourself to check out this company and its legendary Chairman, who mastered “the art of the deal” before Trump even made his first one!”

Getting any warmer, there? You’ll almost certainly recognize the CEO’s name, but we’ll get there in a minute…

“… this company can produce profits in a very unusual way.

“Yes! Mountains of cash are pouring into this company every day thanks to a technology it did not invent, does not own, and does not pay for.

“But it’s a technology—a digital platform—that by 2025 is expected to produce $1.95 trillion a year…”

Oooh, how intriguing! Whatever could it be? Apparently it’s growing really fast, too… from the ad:

“You’re now looking at a company with a 5-year projected growth rate of 9,186%.

“A growth rate practically unheard of for an established blue-chip company!

“And if its share price merely matches that extraordinary 9,186% growth rate…

“A modest $10,000 investment in this company could earn you $918,600 over 5 years.”

Thats a logical fallacy, of course — if a company is projected to grow earnings or revenue by 9,186%, then either that projection is hotly disputed or the company is going to be valued based on that revenue expectation (with some discounting for time and uncertainty) today. Stocks don’t wait to go up after a company has grown, they go up in anticipation of all of that future growth. Sometimes investors overpay or underpay for that future growth, or sometimes surprises happen, that’s what makes a market, but copywriters love to tease the idea that their projected growth in the business means the stock will rise by that same percentage amount… and that’s just misleading.

Which doesn’t mean this is a bad stock, of course, just that you should get the 9,186% growth rate out of your head before you go any further or consider investing in it — if you start with that kind of forecast, then it will be really hard to be critical or skeptical of anything to do with the stock.

OK, brain cleansed of 10,000% gain daydreams? Ready to move on?

What else do we learn about this “secret” stock?

“This company is Wall Street’s version of the goose that lays golden eggs.

“Because it’s constantly creating spinoffs! Hugely profitable spinoffs!

“One every 2-3 years, on average.

“Publicly-traded spinoffs valued in the tens of billions of dollars—even before they were spun off!

“And you’ll automatically own shares in these billion-dollar companies…

“Provided you first own shares in this already multi-billion-dollar company.”

We get more praise of the company and its founder…

“This company has weathered every storm.

“For 33 years and counting.

“Do you know why?

“Brilliant top-down leadership….

“His personal net worth is over $4 billion.

“And he’s as brilliant a businessman as he is unconventional.

“He was a college dropout.

“His first job was as a mailroom clerk.

“Today, he entertains European Royalty wearing shorts and sandals—and is married to a Royal Princess….

“… in his former business, he created TV-sitcoms!

“He even created an entire TV network that challenged and outperformed the top three: ABC, NBC, CBS.”

OK, so fine, this is getting to be too many clues… we’ll leave the Thinkolator in the garage for this one and just tell you, finally, that this is all about legendary entertainment industry icon Barry Diller, who did indeed found the Fox Network ~30 years ago, and his InterActive Corp (IAC), which is indeed headquartered in the Frank Gehry-designed IAC Building in Chelsea that’s been a landmark in that area for a dozen years or so.

So yep, this stock that Jim Woods projects to post 9,000% gains over the next five years is IAC… what’s the story here?

Well, mostly it’s the story of online dating — IAC has had a bunch of investments and divisions over the years, many of which have indeed been spun off either partially or completely, and some of them have been duds (like Ask Jeeves, remember when they were trying to challenge Google for search-engine supremacy?), but the big winner has been their controlling stake in Match Group, which owns the market-leading Match.com matchmaking site but has been relying largely on the Tinder dating app for growth.

More from the ad:

“Over the past three and a half years roughly, since early 2016…

“Its shares more than doubled, on average, every year.

“Gaining 513% to be exact.

“Decimating the S&P 500, which rose only 57%.”

That’s true, it’s cheating a little bit to count from the low of early 2016 but, regardless of your starting point, the huge success of Match Group since it went public about four years ago (IAC spun off about 20% of it in an IPO) has fueled an incredible run for IAC.

We’re also told about some of the other businesses that might be appealing at IAC, and which put it in the leadership of the “on demand” and “access” economy of the future…

“Which sector inside the $1.95 trillion access economy is this company the dominating power?

“The online dating sector?

“A sector expected to be worth $3.2 billion next year.

“Or the global digital publishing sector?

“Which encompasses everything that’s fit to print online from eBooks to investment publications.

“Last year, 2018, that sector was worth $22.05 billion.

“And the biggest threat to cable TV—video streaming…

“That’s an even bigger sector.

“It’s expected to be worth $124.57 billion by 2025.

“The online home service market is even bigger still!

“Home care, repair and maintenance among other online home services is expected to be worth $869.95 billion by 2022.

“There’s also the mobile application market (apps developed for smartphones).

“In 2018, it was valued at $365 billion.

“But, by 2023, it’s expected to nearly triple in size to $935.2 billion.”

I suppose that’s true, but it’s really online dating that stirs the drink for IAC. It does own stakes in 150+ different companies that mostly provide digital services of one sort or another, including some biggies like ANGI Homeservices (ticker ANGI, used to be Angie’s List) and video streamer Vimeo (you can see their full 25-year history of acquisitions and sales here going back to it’s days as a spinoff from Home Shopping Network, it’s really interesting) but the most important ones are the online dating services — Match has bought or launched several dozen different dating services and dating brands over the years and really owns almost the entire market for online dating.

The “excitement” push here is that there may be more spinoffs to come soon, starting with the “full separation” of Match Group that they’ve been talking about since August and, perhaps, a spin-off of ANGI Homeservices after that.

And there isn’t a lot beyond that, the vast majority of revenue and earnings come through Match Group (which owns pretty much every dating site and app, including Tinder) or ANGI Homeservices, and Match is the only one that’s been both big and growing for a considerable period. Vimeo and Dotdash and some of their smaller businesses are growing revenue, but Vimeo still loses money and Dotdash is posting good earnings growth but is so small that it doesn’t really register for IAC at the moment.

I’m not so convinced of the value of ANGI, frankly, though they might be able to turn that business around, so for me this is all about Match Group… which means ideally we’d be able to buy IAC at a meaningful discount to its ownership stake in Match Group, and hope that when Match is entirely separated (assuming that goes through) it will not drop meaningfully in value (this is a risk — right now, less than 20% of MTCH trades publicly so there’s very little float, which probably helps to support the share price). So how does the math on that work right now?

As of September, IAC owned 226.3 million shares of MTCH out of 279.97 million shares outstanding, which is 80.8% of the share count, with complete voting control (97.5%). If they could sell all those MTCH shares at the current market price of $71.75, that would be worth $16.24 billion. That’s not enough, unless you think the rest of IAC’s 100+ other businesses are worth at least a few billion bucks.

They also own 421.6 million shares of ANGI, which has been falling almost as much as MTCH has been rising in the past year or two, and at the current $8.30 share price that would be worth $3.5 billion. So combined, the publicly traded major holdings of IAC are worth $19.75 billion at the moment, if we assume that they could sell these massive controlling stakes at the current market price.

As of today, IAC has a market cap of $18.9 billion, so that’s pretty close. They also have $1.7 billion in debt at the corporate level (not counting the $1.6 billion at MTCH or the smaller amount at ANGI), so if you add that to create a fair enterprise value you’d be at $20.6 billion. Which means that you’re still technically paying a bit of a premium for those two primary assets, and assuming some value for the company’s other assets and brands.

Which is probably a pretty good bet, given Diller’s strong history of building and improving brands over the years (including Expedia, which they spun off in 2005 — though Barry Diller is still the Chairman of Expedia), and the large number of smaller sites and projects they own and have invested in that could one day work out (including Vimeo most notably, but also dozens of others — their big recent investment in Turo, the car-sharing company, and a bunch of publishing assets like Daily Beast and CollegeHumor.com).

But it’s not at all guaranteed, and certainly even Barry Diller has some investments that haven’t played out — the biggest challenge, I expect, is that outside of MTCH and ANGI all of IAC’s other businesses are low-level competitors in fields that are dominated by giants. Vimeo isn’t going to unseat Alphabet’s YouTube, just like Ask.com never amounted to much against Yahoo and Google… it doesn’t mean that those smaller businesses in the IAC portfolio won’t be valuable, and some of them are even profitable on a small scale, it just means we should hold back and not assume a lot of value there beyond the MTCH stake. Put a pause on the daydreams.

If you’re not familiar with Jim Woods, I’ve only written about one of his teaser pitches as far as I can tell — that was when he was touting Blackberry (BB) about a year and a half ago for Successful Investing, which wasn’t such a successful pick, but he also claims a great record as a stock picker, and uses his position in TipRanks as evidence…

“TipRanks, which ranks investment analysts, has me in 3rd place among more than 6,000 investment analysts worldwide.

“But that’s not all…

“TipRanks has confirmed…

“Over the past 5 years…

“359 of my investment recommendations, out of a total of 495…

“Have been out and out winners.

“That’s a 73% money-in-the-bank win-rate!”

That’s more or less true, his page on TipRanks is here, though he’s not currently on the top-25 list of bloggers over there — those stock picks are pulled from his public articles and assume holding each position for a year, it appears, which would have given an average gain, they say, of about 16% for the past nine years. Which is certainly a good return, though I don’t know much else about the TipRanks methodology or how that return might compare with the portfolio he runs for his paid subscribers.

And that’s all I’ve got for you on this fine pre-holiday Wednesday, my friends — IAC is well-covered in the financial press thanks to Barry Diller’s presence and his past success, so you’ll be able to find plenty of competing views… the big question is whether you think MTCH will be worth a lot more in the near future as it gets (probably) completely spun off by IAC, and to a lesser extent whether ANGI will have a good future as the next possible spinoff for the conglomerate… and after you make those assessments, then you can start to think a little about whether you think any of the other portfolio companies and brands look promising.

So where do you come down? Ready for another big surge for MTCH and IAC as they prepare to divorce? See great futures for the rest of the portfolio companies? Or are you worried that spinning off MTCh will get rid of the one real revenue driver? Let us know what you’re thinking with a comment below… and thanks for reading!