LifeLock: Arguing Against The Shorts

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Fundies Capital: Lifelock Inc (NYSE:LOCK): arguing against the short case and showing why the business is misunderstood and undervalued

By Harvest Exchange

From a presentation in late June regarding Lifelock Inc (NYSE:LOCK): arguing against the short case and showing why the business is misunderstood and undervalued.

Partners Group provides capital for Taxfix, Litera

Market CapitalizationsPartners Group Private Equity gained in May. The net asset value for Class I rose 3.5%, while the net asset value for Class A grew 3.4%. The total fund size increased to $5.6 billion. For the first five months of the year, Class A is down 4.4%, while Class I is down 4.2%. Q1 2020 Read More


 

LifeLock: Case Of The False Identity

Sells consumer identity theft protection services via subscription

$1.25B market cap – 97.7mm shares at $12.70

$191mm in cash, 0 debt

$1,050mm Enterprise Value

3.22mm paying subs as of 3/31/2014

I Am Long ? The “Bad Stuff” Is Priced In

Shady characters run this joint

  • Co-Founder is no longer affiliated with the company, and many new execs hired
  • Many anchor on the FTC infraction in 2010, though it doesn’t define the company, as it doesn’t define other companies with past infractions

“Industry sources contend that [the company’s] basic service is nearly worthless”

  • The product has changed from primitive beginnings. Proprietary data is valuable. Finally, consumers pay for many products in which others don’t see value
  • Best?in?class churn shows Lifelock Inc (NYSE:LOCK) customers stick around once they start

“The entire industry has become commoditized”

  • Pricing per subscriber has been increasing at a very healthy clip
  • While many offer seemingly similar products, one is taking the lion’s share of new subscribers

Deutsche Bank analyst estimates for 2017 are unachievable

  • Analyst estimates are largely noise; they don’t look at what matters
  • All that really matters are the # of subs at saturation and the value of each sub, something not addressed in short thesis

A Better Cast Of Characters

  • Skepticismregarding the management team
    • Robert Maynard Jr.
      • Two scintillating articles in the Phoenix New Times that were published in May 2007 and May 2010
      • He was absolutely a shady character – but he left the company 7 years ago, in June 2007
    • FTC settlement regarding deceptive product claims was in March of 2010
  • A new group now runs the show post IPO (October 2012)
    • CEO Todd Davis is still there
    • Two senior executives joined the team from the ID Analytics purchase in March 2012
    • Many hires of senior executives in the last 2 years significantly bolster the management team, and distance LifeLock from its past

LifeLock: Arguing Against the Short Case by Harvest

Harvest