Bronte Media

Longtime readers will know of my fascination with the valuation of online real estate leader MOVE. Specifically that’s it’s so low. And especially so relative to Zillow and Trulia - two newer firms that have raised slugs of capital over the past few years.

One investor, David Nierenberg, agrees with me. The difference between myself and David, by the way, is that David invests and manages a large fund and I moonlight as a wanabe investment fund manager on this blog.

David’s stake is up to around 15% of the company. And now he’s pounding the pavement at investment conferences saying he believes the company is worth $10.

The stock was $2.30 when I first starting blogging about it last December. It’s gone up and down around that, but the general direction was up. That is, until the last month. It plunged briefly to $1.60 but was up 40% to $2.25 again on Friday, after it seems a few believers in the audience David was speaking at tapped out a few orders on their Blackberry.

All of the valuation drivers are still there. Even more so, now that the mantra seems to be in startup land to ‘raise an internal round’ by cutting costs. Well in the public markets it’s basically the same thing but they are driving profit growth from cutting costs.

To be fair, they can cut more fat than a 2007 Britney music video and still not impact the core operations. Are they going to grow much in the next few years? No, but having the number one position in the industry, having the freshest listings, getting their shit together, having plenty of cash in hand and finally putting managers in place that have a clue and it’s hard to see how it can get much worse than $2 per share.

I think there will be an investment meme appear in the next little while which is kind of anti-web 2.0. That is, there have been so many challengers launched in so many different industries in the last 5 years. But in ones that display marketplace economics (i.e. buyers attract sellers who attract more buyers), and online real estate listings search is certainly one of those examples, there is huge forces of momentum at work. See the diversification of Trulia and Zillow into other online real estate applications and offerings as an example of the yielding to those forces.

eBay is another screaming example of people forgetting the marketplace momentum factor.