Meet Zillow: the mystery US property stock Australian billionaires have invested more than $10bn in

Zillow has become a part of pop culture in the US. The online property stock has been a sensational investment for some of Australia’s biggest names as well.

Zillow shareholder Will Vicars.

It is the little-known stock that has more than $10bn of Australian money invested in it, including some of the country’s wealthiest individuals and families, super funds and investment houses.

That stock is Zillow, listed on the Nasdaq in the US, and it’s fast becoming a cultural phenomenon in the US — and an amazing success story for its band of Australian shareholders led by billionaire investor Will Vicars.

Vicars’ Caledonia, the private Sydney investment house that he manages money for alongside Mike Messara, is the biggest shareholder in Zillow with that $10bn stake.

It is understood there are several other members of The List — Australia’s Richest 250 that also have individual stakes in Zillow, having been introduced to the stock by Vicars via Caledonia.

One who definitely is in the stock is billionaire Gretel Packer, who reportedly received more than a million shares in Zillow after she reached a settlement — with the help of Vicars — with billionaire brother James Packer over the dividing of their family fortune in 2016.

Other big names have also enjoyed the upside of investing in Zillow via Caledonia, which has generated big returns from its shareholding in the real estate stock and other strong performers such as global wagering giant Flutter Entertainment.

A year ago, Zillow shares were trading at about $US30 each. They kept rising for the remainder of 2020 and then surged as high as $US212.40 in mid-February. The shares are now trading at about $US140.

According to records kept by Bloomberg, other Australia-based shareholders in Zillow include IFM Investors and United Super Investors.

-

Will Vicars

• Age: 54
• Lives: Sydney
• Estimated wealth: $1.18bn
• Source: Financial services
• Secrets of success: Long-term investments in global stocks like Zillow, Flutter Entertainment and GrubHub
• Source: The List – Australia’s Richest 250

-

Zillow has become a household name in the US as people all around the country surfed the internet looking for new homes while they have been locked down during the COVID-19 pandemic.

So much so that Zillow was recently featured in a sketch on popular comedy show Saturday Night Live, where host Dan Levy fantasised about his desire to browse for luxury homes on his mobile phone.

“Zillow surfing has broken through to a whole new level of pop culture,” said Zillow chief executive and co-founder Rich Barton in an earnings call after the company’s latest financial results were announced in February.

“Fantasising about real estate is not new — our survey results and traffic have always indicated that people love looking at real estate and want to move. What has changed is that more of those people now have the freedom to move. Many Americans untethered from their commutes and offices have begun to re-evaluate how and where they want to live.”

A tech entrepreneur who has disrupted several industries in his career, Barton founded online travel company Expedia and job search engine Glassdoor before starting Zillow.

The company makes money with products that target both buyers and sellers of real estate, including its own home-buying business where it earns revenue buying and flipping homes, as well as a marketplace to advertise homes for sale and rent.

Vicars and Caledonia have backed the stock since 2012. It floated on the Nasdaq at $US20 a year before.

In a recent note to clients. Vicars explained why the company’s long-term fundamentals were strong even when stocks were hit at the start of the pandemic.

“We did not see much fundamental downside in Zillow at $US25/share, for example. At that price, Zillow had a market capitalisation of just $US5bn. The company had more than $US2.5bn in cash on its balance sheet with virtually no debt. CEO Rich Barton had set a goal of reaching $US600m in EBITDA within three years, and we thought this would prove low due to ample opportunities to cut costs and expand operating margins.

“This meant Zillow was trading at about 4x earnings, excluding its cash. In our experience, it doesn’t hurt much when you fall off a pancake. This was as good a set-up as we could ask for as long-term shareholders. Opportunities like this often only present themselves during market dislocations.”

Vicars expects to spin some of Caledonia’s Zillow stake into a new co-investment fund in April.

Read the full 2021 edition of The List: Australia’s Richest 250.