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MARK - Upside Potential Ahead

|Includes:Remark Media, Inc. (MARK)

Remark Media (NASDAQ:MARK) has the potential to double in the next two months.

Currently, the market cap for the company is approximately $11M, while it has well over $40M in assets, and a growing online media business.

I've written about Remark previously, and the risk/reward currently is now at great levels. The stock is currently in the $1.30-$1.50 range, having moved up at the end of last week, while seeing higher than normal volumes.

Over the last several months, the company has completely changed over senior management. It's also secured financing from it's new CEO , Kai-Shing Tao (well connected in the Internet space) that will carry it through June.

On an ongoing basis, Remark is focused on operating Banks.com, IRS.com, and it's new financial portal, Dimespring.com. There have been several revamps of the designs, and Dimespring continues to publish articles by well known financial brands. Both Banks.com and IRS.com would have substantial stand alone value - IRS.com was last purchased in 2007 for $11M. Compete.com data shows traffic starting to take off for IRS.com in January.

Remark owns a 10.9% stake in Sharecare. Sharecare is best known as the site started by Dr. Oz, Jeff Arnold (WebMd), Harpo (Oprah), and Discovery. Sharecare, although currently private, has a valuation of $350M. That makes Remark's stake worth approximately $39M. Sharecare continues to make news and acquisitions, such as the acquisition of PKC, a provider of healthcare decision support software, and Real Age. Sharecare was co-founded by Dr. Oz, as well as a list of impressive partners (Harpo Studio, Discovery, Sony, etc.). Dr. Oz continues to be in the public eye.

Also, intriguingly, Remark owns the international rights to How Stuff Works content (owned by Discovery) in China and Brazil. Discovery paid $250M several years ago for the entire company, so there's the possibility that they'll acquire the remaining international rights. Discovery (NASDAQ:DISCA) has shown an increasing reliance on international revenue, so at some point bringing these rights back in house is likely to become strategically important.

There's also an ongoing partnership with The Street (NASDAQ:TST). From this Seeking Alpha article, there's $55M trapped at TST by TCV. They already have a partnership with Remark, conceivably they could either buy Remark, or use some of that money to purchase a stake in Sharecare - which would likely be appealing to TCV.

From a trading perspective, there's very little float available. The new CEO controls 16% of MARK, and Capital Research Global Investors (formerly run by influential media investor, Gordon Crawford) fund announced they owned 5% (in the $1.30's) recently. Panic selling drove the stock down below $1.00 in December, briefly, but all of that stock has now been vacuumed up. The company is scheduled to release the next set of results in mid-March. That will be the first picture of the new structure that investors have had since several members of the previous management team departed. Given the stocks recent volatility with trading days of just 20-40K, the opportunity for a substantial move up is likely.

Additionally, on the trading side, both March 1 and Feb 15 saw significant upward spikes on decently sized purchases.

When the market cap of the company is $8.8M - either the stake in Sharecare, or the value of the domain names, could result in a substantial win.

Disclosure: I am long MARK.

Stocks: MARK