that I think will provide a satisfactory IRR, with limited downside. This is a micro cap idea only suitable
for personal accounts and small funds – but the volume lately has been fairly large, creating the
opportunity to build a substantial position. The idea here is straightforward and reminds me of the
acronym KISS or “Keep It Simple Stupid.” Since I might have trouble filling an entire page on this idea, I’ll
reference the Wikipedia page for the KISS principle:
KISS is an acronym for "Keep it simple, stupid" as a design principle noted by the U.S. Navy in
1960. The KISS principle states that most systems work best if they are kept simple rather than made
complicated; therefore simplicity should be a key goal in design and unnecessary complexity should be
avoided. The phrase has been associated with aircraft engineer Kelly Johnson (1910–1990). The term
"KISS principle" was in popular use by 1970.
Actua Corp recently sold off the bulk of their assets and made an initial liquidating dividend of 14.89 in
early February. In investor communications, which they have reiterated recently, their guidance on total
distributions upon liquidation has been 15.68 to 16.50 per share. After adjusting for the dividend, the
new range is .79 to 1.61. The stock closed today at .71. Like I said, this is a pretty simple idea. The
company expects to realize full liquidation over a 12 to 18 month time period.
The majority of the assets left are minority share investments in companies I know virtually nothing
about. Investors do know the names of these companies though. They are called: Anthem Ventures,
InstaMed, Parchment, Savana, Rittenhouse Ventures, Relay Network, and QC Holdings. These assets
are collectively valued at $17 million. This is the “book value” of these investments that Actua has
carried the values at. It appears that Anthem is held at zero, despite receiving a distribution of $1
million in 2015 from the investment.
The largest two seem to be Instamed and Parchment: From the 10K:
Our vertical cloud (venture) reporting segment includes businesses with many characteristics similar to
those of the businesses in our vertical cloud segment, but in which we take a less active role in terms of
strategic direction and operational support, and, accordingly, towards which we devote relatively small
amounts of personnel, financial capital and other resources. Each of the businesses in our vertical cloud
(venture) reporting segment, the most significant of which are InstaMed and Parchment, are accounted
for under the cost method of accounting, since we own less than 20% in each of these businesses (see
Note 2 , "Significant Accounting Policies," to our Consolidated Financial Statements).
During the year ended December 31, 2016, Actua increased its interest in Parchment Inc. ("Parchment"),
a cost method business, by $0.7 million . Actua also elected to sell a portion of its interest in InstaMed
Holdings, Inc. ("InstaMed"), a cost method business, pursuant to a tender offer. This sale resulted in
a $1.6 million decrease in Actua's interest in InstaMed, as well as a gain of $2.8 million .
This implies to me that they are still believers in Parchment enough to invest more at least. It also
implies that the Instamed valuation might be up by 75% from original cost.
