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Citadel Advisors Report a 6.1% Stake in Zillow

Ken Griffin’s Citadel Advisors, has just filed a 13G with the SEC showing a 6.1% stake in Zillow Inc . The value oriented hedge fund owns 1,588,436 shares of the Seattle based company, up from 442,775 shares, or 1.71% of the company owned as of the end of the third quarter. Citadel’s stake in Zillow is worth approximately $40 million, making the fund the fourth largest shareholder of the company.


Zillow Inc (NASDAQ:Z)’s business model is very straight forward. The company operates a destination website that provides consumers with data and information about homes around the country. The information is valuable to consumers because it allows them to quickly glean the specs of a home, a ballpark market price and also contact a real estate agent if the consumer wants to explore the lead in more details. The website is very popular, generating over 36MM unique monthly visitors for the last reported period CQ3:12.

Zillow Inc (NASDAQ:Z) currently makes money in three ways. 1) The company earns subscription fees from agents who wish generate leads. 2) The company earns commissions through brokering prospective clients with lending institutions through the company’s Mortgage marketplace. 3) Zillow Inc (NASDAQ:Z) leverages the traffic on its site by selling display ads on its home page and in the side bar of home listings. The company has articulated its ambitions to also monetize its evolving For Rent marketplace as well as a Home Goods / Improvement marketplace, but the monetization of those initiatives is still in development.

For the nine months ended 30 September 2012, Zillow Inc revenues increased 79% to $82.5M. Net income increased from $180K to $5.4M. Revenues reflect an increase in demand for the Company’s products and services due to favorable market conditions. Net income benefited from General and administrative includes decrease from $1.7M (expense) to $0K, Other income increase of 30% to $104K (income).

Disclosure: No position