Bronte Media

PEHub has another great article on the disconnect between public and private valuations.

Nowhere is this more evident than in my corner of the world: Online real estate.

You have Housevalues trading at practically its cash value even though its roughly a break even business and has some interesting acquisitions and investments.

There is MOVE. Long time readers will know of my love of the stock at this valuation and in general with the company’s direction now that it has new management some idea of what to do. Here’s another recent post by me on the company.

Basically, public investors are saying to shit with online real estate.

But then in the private sector you have Zillow and Trulia. Trulia recently announced a $15m series C investment to bring its total capital raised to $33m. Zillow has raised roughly $87m.

So you have a very optimistic private capital market and a very pessimistic public one.

I would obviously side with the optimists, as I am really voting with my feet.

But that to me solves a big problem in the venture capital industry: how to invest the large amounts of capital they have raised. A $500m-$700m early stage venture fund doesn’t really make sense but a $500-700m crossover fund clearly does.

I wouldn’t be surprised to see if some of the larger firms started taking large stakes in the small public Internet companies, as their valuations relative to private financings are just a screaming buy (of course if you believe it’s all going to shit then nothing is a good buy).

I just have a hunch that something major will happen in the coming year, and maybe online real estate will be a good example of that trend.