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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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OPEN: Closing Out OPEN Short Idea With a (-19.7%) Loss, Alpha Generation of +48.7%

June 13th, 2014

It would be easy for us to simply dismiss PCLN’s proposed acquisition of OPEN for $103/share as an irrational bid and nothing more than another chilling sign of Internet bubble 2.0, but in no way would that approach improve our...

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MCRS and OPEN: Market Share Losses and Cannibalization of TAM Are Accelerating

May 21st, 2014

Yesterday we had the opportunity to tour the floor at the National Restaurant Association’s 2014 annual conference.  We wanted to pass along some key observations from our time in the exhibit hall.  As you might imagine given our...

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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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OPEN: Deceleration in Cover Volume and Continued Restaurant Share Losses Pose Problems

May 2nd, 2014

In what surely has become an alarming trend for bulls on the stock, OPEN MISSED consensus revenue expectations for the fourth time in five quarters.  We cannot think of another situation where a growth company so consistently fell...

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TRLA: What Happened Here? Where’s the Earnings Leverage? 66,700 Subs and Not Making Money…

April 29th, 2014

Make no mistake, TRLA is a stock that trades ENTIRELY off of operating metrics and relative valuation.  For now, there are enough investors willing to value the company off price/revenue multiples so long as TRLA delivers...

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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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OPEN: As Customer Acquisition Costs Sky-Rocket and Competition Gains Momentum Investors Are Left To Ask: If Not Now,...

February 7th, 2014

Approximately three months ago we postulated that OPEN’s EPS in FY14 could actually be flat on a YOY basis. At that time, and at every point up until the company’s earnings release yesterday...

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OPEN: As Opentable Loses Market Share in North America the Potential for a Minneapolis 2.0 Scenario Should Concern...

December 20th, 2013

As we approach year end it seems like a natural process for most investors to evaluate what they got right and what they were wrong about over the past 12-months.  We are no different.  While...

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OPEN: A One Legged Growth Stool Increasingly Vulnerable to Competitive Threats

November 6th, 2013

North American diners seated per restaurant is for OPEN shareholders “the one metric to rule them all” as far as stock price action is concerned.  In 2012 when diners seated per restaurant in North America slowed, OPEN shares struggled...

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TRLA: Nowhere to Go But Down from Here As Traffic Growth Appears Poised to Slow and “True TAM” Penetration Becomes...

October 30th, 2013

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...

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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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OPEN: Hope Increasingly Creeping Into the Bull Case

August 1st, 2013

In another market environment things might be different.  Marking the fifth time in the past three years, OPEN missed consensus revenue expectations for 2Q13.  On top of that, the company lowered guidance for FY13 substantially.  Panic? Not exactly.  Had the...

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OPEN: Acquisition of Rezbook - OPEN Dominance or More IACI Incompetence? Probably a Bit of Both, Margin Impact Could be...

August 1st, 2013

In what can only be described as a surprise to the marketplace, OPEN announced that it had reached an agreement to acquire IACI’s Rezbook. As part of the deal Urbanspoon, a leading mobile...

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TRLA: 2Q13 Had More Signposts of Our Short Thesis Then You Might Think, Desktop User Growth is Collapsing – Canary in...

August 1st, 2013

“There’s a party going on right here, a celebration to last through the years….”Kool & the GangIn retrospect it all seems so simple doesn’t it? Let’s play a short game of check this...

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OPEN: YELP’s Acquisition of SeatMe Could Herald the Start of a New Era in the North American ERB Space

July 19th, 2013

And so it begins….Two and a half years ago we introduced OPEN as a short idea predicated on four principal tenets: At its core, OPEN provides a “solution without a problem”.  OPEN’s ERB technology and...

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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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MCRS and OPEN: Thoughts From the NRA Show 2013 – Tablet POS Systems Continue to Come of Age as Competitive Headwinds...

May 21st, 2013

Yesterday we had the opportunity to tour the floor at the National Restaurant Association’s 2013 annual conference.  We wanted to pass along some key observations from our time in the exhibit...

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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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OPEN: As Sales Force Productivity Collapses a Few Critical Questions to Ponder; 10-Q Highlights and Observations

May 7th, 2013

Seriously, who wouldn’t love this business?  In 4Q12, OPEN’s growth in diners seated per restaurant collapsed, but the company had healthy net additions in restaurant clients, stability in NA cover...

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OPEN: Four Reasons Why OPEN’s Profitability Prospects in Europe Remain Grim

May 2nd, 2013

A few weeks ago we published a lengthy report which outlined some of the more troubling competitive developments for OPEN in North America. We maintain our view that the company is on the cusp of a major deceleration in many of its key...

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OPEN: As Competitive Undercurrents Take Hold in North America When Will Investors Start to Take Notice?

April 12th, 2013

It’s true, OPEN shares are up 55.6% over the past 12-months with the stock witnessing gains of nearly 22% in the past 3-months alone.  The short interest, which once represented close to 50% of the float has now...

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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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OPEN: Growth Is Grinding To a Halt…. And TopTable Isn’t Going to Save the Day

February 8th, 2013

Well at least they didn’t miss consensus revenue estimates again….  Seriously though, do you remember the “good old days” when supposed growth companies that reported a massive deceleration in operating metrics, low quality...

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Proprietary Restaurant Checks Suggest Challenges Could Mount for OPEN and MCRS in 2013; Other Key Observations

January 22nd, 2013

Over the past month, PAA Research conducted a survey of approximately 80-85 restaurant operators a significant percentage of which are clients of OPEN and MCRS. The general purpose of the survey was to gain...

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XOXO: After Another Quarter of EPS Upside and Strong FCF Generation, We Have to Ask: Where is the Love (from Investors)?

November 9th, 2012

Heading into XOXO’s 3Q12 earnings release we thought we knew the following: The Knot and the Bump franchises remained incredibly strong from a consumer engagement perspective Investors had...

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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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OPEN: After Another Ho-Hum Quarter, the Six Lingering Questions We’re Thinking About

November 2nd, 2012

Heading into the company’s 3Q12 earnings release, OPEN shares had rallied 31.8% over the past 3-months compared to a meager 3.4% gain for the Nasdaq.  Clearly investor enthusiasm for OPEN shares continued to increase over the past...

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