This content is from: Portfolio

Morning Brief: Valiant Hopes to Cash in on a Dropbox IPO

The San Francisco hedge fund firm was an early investor in the file-sharing company, which is reportedly in the process of going public.

  • By Stephen Taub

Investors are speculating about the potential valuation of Dropbox, which reportedly filed confidential documents to go public. The cloud-based file sharing company’s private valuation slipped from the $10 billion suggested by the last private funding round, but subsequently rebounded, according to published reports. CNBC reported that the company is currently worth between $6.6 billion and $8.5 billion. One hedge fund firm that is eagerly anticipating a filing is Chris Hansen’s Valiant Capital Management. The San Francisco firm’s Valiant Capital Partners fund plunked down about $9.5 million to invest in the company in September 2011, according to client letters. As of the end of the first quarter of 2017, the firm said the investment was worth more than $13.3 million.

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Tiger Global Management and China Media Capital co-led a $450 million Series E financing for Meicai, a fledgling Chinese company that helps farmers sell vegetables to restaurants, according to Crunchbase.com and Bloomberg, citing people familiar with the matter. The company is now valued at about $2.8 billion. Meicai means “beautiful vegetable,” according to the report. This is yet another example of a disruptive technology firm enabling customers to use a smart phone app to eliminate the middleman.

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Barclays has initiated coverage of Netflix with an overweight rating and a $245 target price. “Netflix bull case at the core is relatively simple-if subscriber growth is faster than content cost growth over time, it could become one of the most successful media companies,” the investment bank tells clients in a recent note. “We believe this is possible.”

Barclays acknowledges several limitations for the streaming media company. It is not a platform like Amazon, Apple, Google or Facebook, thus limiting its bundling opportunities. And its balance sheet is not nearly “as deep” as those companies, Barclays states in the note. In addition, the bank stresses that Netflix’s access to premium content and its cost “could become more difficult due to media mergers and local competitors in many major markets.” However, it is confident management’s vision and track record will offset these concerns.

At the end of the third quarter, at least 117 hedge funds held a position in the stock, according to Novus, the research and analytics firm. Shares of Netflix closed Friday at $221.23. The stock is already up 15 percent this calendar year.

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