Remark Media (NASDAQ:MARK) has recently brought in a new management team. They just raised $4.25M, and announced the purchase of Banks.com [BNNX.PK]. Most importantly, they have a 12-15% position in Sharecare, which is crucial to their valuation, which I'll detail more in this article.
Once the Banks.com transaction closes, MARK will have about 5-6M in cash relative to a 30M market cap with approximately 7MM shares outstanding. MARK will include: a Brazil and Chinese content play - international rights to How Stuff Works content, plus World Book in China, new management with expertise in selling/partnering for website advertising, as well as ownership of Banks.com and IRS.com, with opportunities to move them to their platform, and take costs out of the legacy BNNX system, especially public company costs.
Discovery Channel is a 40% owner of MARK, as a result of the $250M purchase of How Stuff Works several years ago. While the corporate overlap is tricky, at some point Discovery is going to either a) spin HSW back out as a separate company b) completely write it off or c)decide that having all of those international rights back is important, and will have to pay market rates to avoid any self-dealing-type lawsuits.
There is a low float in MARK. Over the last 6 months, any 100K+ trading days have resulted in a .50-$1.00 move in the stock.
MARK had a conference call last week in which they disclosed that they are launching Dimespring by 4/1 - a socially focused personal finance site using Sharecare-esque platform. Banks.com and IRS.com will be focused on content. They feel the China and Brazil content has long term value, and will pay off down the road. They also said, in response to a question, that they will continue to issue PR related to Sharecare valuation.
There is also an arbitrage opportunity currently available with BNNX and MARK currently. Instead of paying $6.00 share for MARK, you can buy BNNX at .12 - it's converting 40 to 1, and you'd save a dollar a share when the merger goes through.
MARK owns 12-15% of Sharecare. Sharecare includes Dr. Oz's sites, credibility, and with the latest acquisition is now a top 10 health site based on Comscore data. Sharecare's gotten 12+ million in funding recently, was valued at 250M+ LAST June, shows great growth on Compete.com (combined company now over 5M uniques/month), and just announced an acquisition of RealAge, in a stock swap which brought Hearst on board. There's a nice roll up going on there. Sooner or later, MARK's ownership stake is going to get taken into account for valuation purposes.
The 12-15% stake in Sharecare, valued at $250M last year, means the stake is worth $30M-37.5M (the filings make it a little tricky to figure out the exact percentage). Adding that, the cash on the balance sheet (5-6M), and the value of Banks.com (figure 3M on domains along), you're looking at about 43M in value.
Right now, market cap is 33M so there's headroom, even with the new shares being issued.
I'm keeping an eye out for catalysts. The three most likely to occur are: Sharecare publicity/IPO/mentions by DISCA, publicity for MARK (new management seems investor friendly), and the launch of MARK's own personal finance portal Dimespring, later this month.
Disclosure: I have position in MARK.