Provide: Liberty's Bargain

I really like Provide Commerce (PRVD), and my thinking prior to today was that after a year or so as a public company, they were just starting to get a handle on how to manage the Street's expectations and would provide accurate and timely earnings guidance. When I wrote about them at length a few months ago, and again noted some nice appreciation they had before Thanksgiving, I had plans to see this investment through for a long time.

And I thought next year might be a very good one for the Proflowers business, as growth should continue at a good clip, and that we might see an opening for the Cherry Moon Farms and Uptown Prime brands to perform well, even though I still think they'll have a rough time, given their entrenched competition.

But apparently the board was not quite as optimistic abou the long-term opportunities for growth. Maybe they know something I don't know about how the business is shaping up, or maybe they were pressured by their majority shareholder, Javion holdings, to make a deal, or maybe John Malone, Liberty's head, just got lucky and pulled one over on them.

Either way, Provide Commerce seems like an odd fit for the Liberty Media empire, and $33.75 seems like a lousy offering price for a company on the upswing -- a mere 10% (roughly) premium to last week's share price, though I guess you could argue that rumors of a buyout propelled some of the recent gain as well. I didn't hear any such rumors, but they're usually out there.

But as a small shareholder, my vote will be meaningless, given the fact that Javion holdings has committed to this deal and this price. So I sold.

I closed out my two Provide Commerce positions today, at $33.51 and $33.54.

I don't see any reason to wait for the middle of next year to close on a deal that's a few cents higher, and I'm guessing that Javion's commitment to this deal means we're unlikely to see the board squeeze a better price out of Liberty or any other possible suitor. I had no tax reasons to wait until a year was up, since both these positions are in a tax-sheltered account (and one is still slightly underwater anyway).

This does somewhat reek of John Malone trying to be Barry Diller and to build a little Internet empire, but frankly, with a tiny company like this squeezed in amongst some big cable properties it's hard to see the synergy. Perhaps this is the start of another buying binge of dot.com companies, which might be good for the other small independents out there, but given Interactive Corp's middling success at turning it's portfolio into a working internet business that's larger than the sum of it's parts, I'm a little surprised that Malone is making an attempt at something so far removed from his wheelhouse.

Oh, well. I broke even on one of my positions and doubled the other one in PRVD, so it works out to be a reasonably nice short-term trade of less than a year. But I was hoping for more.