Liberty Tripadvisor: Catalyst arrived on a dormant special sit
TL;DR: Liberty Tripadvisor (LTRPA) is a holdco owning Tripadvisor (TRIP) shares. Think of LTRPA like leveraged version of TRIP. Pull up todays pricing on LTRPA vs. TRIP to get a sense. Multi-bagger potential on straight equity; no theta/etc.
If TRIP’s technical-breakout sticks LTRPA is going to be a fun-time.
- Steep holdco discount. LTRPA simply owns roughly $600mil of Liberty’s stake in Tripadvisor but it trades at a $250m market cap. The holdco gap narrowing to normal holdco-margins should provide a decent return in-and-of itself. You’re buying $1 for $0.50.
- It’s Liberty Media. Greg Maffei & John Malone love making money. (We’re just gonna forget the QRTEA part of Liberty mythology lmao). LTRPA is undoubtedly a stain of Maffei’s reputation and he would love to change that. He plays to win.
- TRIP may be finally breaking its brutal downtrend. A lot of special-sits folks have sidelined LTRPA for this very reason; just letting the pain settle first and letting the market say when to go.
- Why did the downtrend break? Tripadvisor is turning around slowly. The new Liberty-appointed CEO is finally taking the reins and the quarter was solid. There’s enough bad-news baked into price that it’s fairly asymmetric now.
- Travel looking good. TRIP & LTRPA were murdered by COVID.
- Tripadvisor is a good asset historically run by underwhelming management.
- Nice market backdrop with the bear-market providing a natural tailwind. Tons of shops are trapped short/underweight-equity during a very oversold environment. Recession will be a shallow-one or non-existant after Q2 GDP revisions until late-2023.
The last time TRIP traded $30/share, LTRPA traded $2.50/share. It’s a little more complicated than that but you can get the idea.
Risks to consider:
- LTRPA is very small and illiquid. Do not use market orders. Anything this small & illiquid can whipsaw you fast. Please be diligent on risk-controls and size it accordingly. For myself personally I’d size it like you’d size a call-option: 1-3% of portfolio.
- Historically Tripadvisor has been a place money goes to die. This is a very contrarian play.
- LTRPA had a fairly big fuckup in March 2020 with a margin call that was ultimately bailed out by Certares.
Enjoy & have fun on Greg Maffei’s money-train. I mostly lurk so don’t expect much chatter from me; just thought this was a fairly juicy sit to share.
Disclosure: Long LTRPA. Small option-sized position in my PA & client accounts
Edit: My thesis has nothing to do with LTRPB’s weird trading over the past week or so. Liberty B-shares are Malone’s way of keeping control interest over Liberty (supervoting shares) and are thus very illiquid.
Submitted August 05, 2022 at 08:35PM by yellowbrickroad2YOLO
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