Baupost ups position in eBay
The Baupost Group raised its position in eBay Inc. (EBAY) that accounted for 6.01% of the fund’s total third-quarter portfolio. The fund owns 6,096,707 shares, up from 4,436,300 shares in 2Q14. The position was initiated in 2Q14. The stock price is up ~ 9% since the second quarter. JANA Partners, as well as Dan Loeb’s Third Point Partners, have also added to positions in eBay.
Overview of eBay
A global technology company, eBay enables commerce through three reportable segments:
- The Marketplaces segment includes the eBay.com platform, its localized counterparts, StubHub, and sites for online classifieds.
- The Payments segment consists of PayPal and Bill Me Later.
- The Enterprise segment includes the company’s Magento business. Magento provides commerce technologies, omni-channel operations, and marketing solutions for merchants of all sizes.
eBay to spin off PayPal
eBay said in October that it was planning to spin off PayPal by the second half of 2015. The company was in a proxy war with Carl Icahn and had rejected the idea of a split earlier.
Market Realist reported on eBay’s results in October, noting that eBay and PayPal had been on different growth trajectories for a while. Perhaps that’s why shareholders were urging the PayPal spin-off. This hypothesis gained support last quarter when eBay reported only 6% year-over-year revenue growth for its Marketplaces segment, while PayPal’s revenue increased by 20%.
eBay sees sluggish growth at Marketplaces
In 3Q14, eBay posted revenue of $4.4 billion, a 12% increase from the same period in 2013. The company saw GAAP, or generally accepted accounting principles, earnings of $673 million, or $0.54 per diluted share. Non-GAAP earnings totaled $848 million, or $0.68 per diluted share. GAAP net income fell 2% year-over-year. Marketplaces revenue grew 6% to $2.2 billion, and Payments revenue rose 20% to $2.0 billion.
The company has seen concerns over slowing growth in its Marketplaces segment and mounting competition from Amazon.com Inc., Google Inc., and Alibaba Group Holding Ltd.
Market Realist recently noted that eBay’s third-quarter earnings were off and that guidance was disappointing.
Baupost’s holdings in 3Q14
Seth Klarman’s fund added new positions in Ocwen Financial Corp. (OCN), Antero Resources Corp. (AR), and Veritiv Corporation (VRTV). It raised its positions in Cheniere Energy, Inc. (LNG), eBay Inc. (EBAY), Keryx Biopharmaceuticals, Inc. (KERX), and PBF Energy Inc. (PBF). The fund slightly lowered its position in Theravance Inc. (THRX). It didn’t sell any positions during 3Q14.
The next part of this series will look at Baupost’s position change in Keryx Biopharmaceuticals.