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Z: Forget the Agent in North Dakota Spending $20K and the Growth in Agents Spending $5K/Month, Deceleration Is the Real...

August 5th, 2015

Investors love anecdotes about companies; they represent the “broth” in the mosaic theory “soup” we create on any given investment idea. Industry statistics and company specific filings...

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Z: A Sin of Omission and Other Thoughts on the CFO’s Departure

July 9th, 2015

From our perspective, within the walls of Zillow Chad Cohen has been the fourth most important person in the company’s empire building efforts over the past decade behind Spencer Rascoff, Greg Schwartz, and Richard Barton.  This is why we think...

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Z: Game Changer? The Age of Upstream Might Finally Be Upon Us As Brokers Attempt to Reassert Control over the Flow of...

May 15th, 2015

“Beware the the “tions” of 2015, Especially Those Related to Project Upstream….”-          PAA Research, 1/29/15“There’s something brewing here that really makes me think that...

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Z: Purposeful Obfuscation of Slowing Metrics and Other Key Takeaways from Zillow’s Earnings Release and Analyst Calls

May 13th, 2015

Heading into the company’s 1Q15 earnings call we thought we might get the following from Zillow: Messy 1Q15 results - check New metrics that would be impossible to reconcile with historical...

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Z: Stretching to Achieve Growth and Shrinking the TAM – Zillow’s Inventory Issues Result in New Policies that...

April 24th, 2015

For the past year, we have been arguing that Zillow has a major advertising inventory problem.  The growth of the company’s premier agent featured listing program combined with deals Zillow has...

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Z: Is It Time to Question This Management Team? Taking our Price Objective to $50

April 15th, 2015

Well that was interesting.  This is not our first rodeo in a heavily shorted battleground stock, but for some reason each experience often reveals something new about potential trading action.  Today’s action certainly underscores a...

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Z: Five Questions We’re Thinking about This Week, Including: Do Internet Leads in Real Estate Convert at Less than 1%?

March 23rd, 2015

2015 is shaping up to be an incredibly challenging year for Zillow.  The ground is shifting rapidly in the residential real estate space as legacy brokerage firms and media companies (think News...

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Z: Trulia 10-K Observations – Rapid Deceleration in Growth Is the Headline

March 2nd, 2015

This morning Trulia filed its 2014 10-K.  As you might remember, on the conference call discussing Zillow’s 4Q14 earnings and the closing of the acquisition management was unwilling to provide much detail on Trulia’s 4Q14 financial...

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Z: Pricing Looks to be the Lever of Last Resort; Plenty of Potential Negative Catalysts on the Horizon

February 18th, 2015

As long time followers of PAA Research know, we have a fair amount of experience dealing with heavily shorted stocks.  This is not our first rodeo with a stock that experiences a vicious rally that seems to have been...

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TRLA: Closing Out TRLA Short Idea with (-62.3%) Loss, 0.1% Alpha Generation, Z Remains Our Top Short Idea

February 17th, 2015

We are closing out our TRLA short idea with a (-62.3%) loss following the company's acquisition by Zillow.  Many, if not most elements of our short thesis on TRLA did indeed play out: in almost every way the...

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CSGP: Throwing the Marketing Gauntlet Down in Rentals Could Have Negative Implications for Everyone, Including CSGP and...

February 17th, 2015

“So hold on tight, with all your might… Cause MC's [market caps] crumble when we rumble… Cause in this battle, I’m takin no prisoners, I’m slayin MC's right on the...

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Z/TRLA: Beware the “tions” of 2015, Especially Those Related to Project Upstream

January 29th, 2015

“I’m wide awake. I’m wide awake. Wide awake. I’m not sleeping. Oh, no, no, no….. If I could, you know I would. If I could, I would. Let it go….” U2, “Bad”, The Unforgettable Fire In this wonderful song...

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Z: Cuts to Featured Listings for Premier Agents Suggest Zillow’s Advertising Inventory Problems Could Be Escalating...

September 5th, 2014

Approximately two months ago we published a report backed by a review of more than 2,000 listings in 50+ markets on Zillow (“Z: Look at the Listings, the Zillow Ecosystem Might Not Be What You...

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Z: When You’re Trying to Change the Narrative Why Let the Details Get in the Way of a Good Story - The Truth about...

August 6th, 2014

Now it’s starting to make sense.  Now we understand why Zillow agreed to pay $3.5B for a company which by almost every measure is 2nd or 3rd rate in the listings aggregation space.  Now we are...

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Z/TRLA: What Is and What Might Never Be – Views from 400 Agents on Zillow, Trulia, and Housing

July 24th, 2014

We recognize that there are rumors in the market that Zillow could be in talks to acquire Trulia.  We will have more extensive comments shortly, but we wanted to provide you with some insight on what the agent community...

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Z: Look at the Listings, the Zillow Ecosystem Might Not Be What You Think It Is – the Fallacies of the Bull Case

June 30th, 2014

“You can observe a lot by watching”-          Yogi BerraAs Zillow shares climb to levels we previously never thought possible (amazingly in the absence of any material new news) we have spent...

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Z: Is Zillow Becoming a Pricing Story? That’s Not Necessarily a Good Thing

May 8th, 2014

Was it good enough? Time and time again that was the question we were attempting to answer in our conversations with investors after Zillow reported 1Q14 results and provided initial 2Q14 guidance yesterday.  The trading action after hours...

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Z: Eight (Reasons) Is Enough, Time to Get Short with a Price Objective of $55

April 8th, 2014

In the context of what has transpired in the broader Internet space over the past two weeks, Zillow shareholders have to be feeling pretty good about themselves, or at the very least quite fortunate.  After all, the 8-10% sell-off in Z...

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TRLA: They Had No Choice, Now Come the Tough Questions

February 14th, 2014

Well, now we know why…. In early December, TRLA announced a convertible notes offering which was eventually upsized to $200 million.  The notes convert at $35.93/share, or roughly 2% below where TRLA shares closed yesterday.  The timing of the notes offering...

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TRLA: Share Losses Have Accelerated, How Will the Company Respond?

February 12th, 2014

It all sounds so intoxicating doesn’t it? To company management (and presumably bulls on the stock) Trulia is a leading rapidly growing mobile based residential real estate search platform integrated with a cloud based CRM system.  How many investor...

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TRLA: A Storm Is Brewing Between Brokers and MLS’s, Assessing the Potential Collateral Damage for TRLA and Z

October 10th, 2013

“There’s something brewing here that really makes me think that the people in this room need to rethink their role.  Some of you[MLS representatives]  may be in denial. You don’t know that there’s a...

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TRLA: All Listings Aggregators Are Not Created Equal, Time to Get Short

June 7th, 2013

It seems to happen all of the time in growth industries, particularly among small and mid-cap companies.  A leader in said growth industry goes public, creates a successful track record, which engenders investor enthusiasm about the company and...

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Z: With Few Catalysts on the Horizon, We’re Closing Out Our Long Z Idea With a 72% Gain

May 7th, 2013

Almost a year to the day from when we first introduced Z as a long idea, we’re closing it out with a 72% gain.  It’s been a wild ride to say the least.  Was it really only 6-months ago when the stock ticked $23.00 following...

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Z: 20% of the Traffic (and growing) and Less Than 1% of the Spend; Zillow’s TAM Story Gets Better and Better

February 14th, 2013

Didn’t we go through the same experience last quarter?  Zillow beat revenue and EPS for 4Q12, operating metrics were stellar, and management guided lower in large part due to increased expectations for...

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Z: Sometimes It’s Important to Remember These Guys are “Empire Builders”…

November 6th, 2012

If you told us heading into the earnings print that Zillow would have added more than 4,000 premier agent subscribers in the third quarter, we almost certainly would have expected Zillow shares to trade higher.  Obviously that has not...

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Z: A Closer Look at the Rental Property Marketplace – Raising Estimates and Price Objective to $50

October 22nd, 2012

In the housing depression over the past five years, there has been one segment of the marketplace that has performed quite well – rentals. Historically, the rental property market has been largely comprised of...

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Z: All About the Metrics

August 8th, 2012

Zillow shares traded off sharply after hours yesterday following earnings results that were good, but perhaps not strong enough relative to “whisper numbers”.  Additionally, the company filed a shelf offering which included the option for significant stock holders to sell as much as 3.6MM...

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My Interview in Barron's

July 1st, 2012

In case you missed it, I recently had the opportunity to speak with Leslie Norton of Barron's about PAA Research, our approach to idea generation, and some of our latest thoughts on for-profit education, payment processing and OPEN, Z, BGG, and TTC.  You can find the full interview HERE.

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Z: Zillow Provides a Glimpse of the Future, While Investing In It

May 3rd, 2012

Some investors might be perplexed by the strength in Zillow shares after hours.  Yes, the company did report strong 1Q12 results that handily beat estimates.  Yes, the operating metrics delivered in 1Q12 were fantastic and well above what most...

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700+ Real Estate Agents Can’t Be Wrong. The Housing Market Is On the Cusp of a Sustained Recovery. Getting Long Zillow

May 1st, 2012

This is a report about housing. This is also a report about a company that has the potential to transform the home purchase process in the US.  Every Spring for each of the past three years we have...

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Current Ideas

AYI

SHORT

$129

RON.TO

SHORT

$9

BIG

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$28

ESI

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DV

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BGG

PAIR - LONG BGG/SHORT TTC

25%

TTC

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25%

Z

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NA.TO

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HCG.TO

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ING.PA

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ZU

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TRLA

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MCRS

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APOL

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OPEN

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BCO

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WWE

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$25

KNL

PAIR - LONG KNL/SHORT MLHR

25%

XOXO

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CSGP

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$100

GCA

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IPSU

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$20

MLHR

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$22

ARC

LONG

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LOOP

PAIR - LONG CSGP/SHORT LOOP

40%

THQI

LONG

$35

WPO

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$275

COCO

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HNI

SIG

RGR