Seeking Alpha

Buying the dip in certain small cap names

Mari Cibelli's Marathon Partners - as its name suggests - invests for the long haul with a concentrated portfolio of growth names. Since the fund's 1997 inception, it's up an annualized 16.8%, more than double the S&P 500, and Cibelli is taking advantage of the selling in small caps to add to his favorites.

One recent buy is Shutterfly (SFLY) which makes up about 20% of Marathon's AUM. Cibelli thinks consumers will grow disenchanted with rival products from Facebook and Snapchat, and sees SFLY revenue growing 16% per year through 2016, and enterprise value more than doubling to about $2.4B by then.

Marathon's 2nd-largest holding is XOOM, where he expects pre-tax earnings to jump to $80M from less than $10M this year. If the stock sells for 20x that figure, it should more than double from here.

World Wrestling Entertainment (WWE) is Marathon's 4th-largest holding at 6% of AUM, and the pummeling since March has brought the shares back down to around Cibelli's original 2011 purchase price of $11. The NBCUniversal deal will increase WWE's revenue by 50% instead of 100%, and Cibelli has adjusted his target price accordingly, but still sees the stock as a double by 2016.

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Comments (3)
  • Hal44
    , contributor
    Comments (604) | Send Message
    It seems as if XOOM's competition is taking XOOM seriously, (Western Union (WU), Money Gram(MGI), large intl banks, even Walmart) reducing or cutting transfer and delivery rates and making access/pickup easier. Won't this affect XOOM's margins and growth negatively? Interested in your thoughts in above companies and XOOM. Thanks
    26 May 2014, 10:27 AM Reply Like
  • King Rat
    , contributor
    Comments (1081) | Send Message
    I would assume you are right. Also insiders (management) have been selling shares lately. I could never bring myself to buy a stock when so many insiders are selling. Maybe they are selling special options that would have expired otherwise, maybe there's more to the story, but insider selling shifts risk to the downside dramatically.
    26 May 2014, 12:09 PM Reply Like
  • Patent News
    , contributor
    Comments (1455) | Send Message
    just bc people would use facebook less in theory does it automatically support that they would replace it with shutterfly? dunno.
    27 May 2014, 06:20 AM Reply Like
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