Pale Fire Capital Increases Stake in Ziff Davis, Citing Undervaluation
Pale Fire Capital, led by Jan Barta and Dušan Šenkypl, has been actively investing in American capital markets since the beginning of the year. Following investments in Phreesia and Angi, the firm announced a 6.9 percent stake in digital media and internet company Ziff Davis (ZD) in a recent filing with the U.S. Securities and Exchange Commission [SEC Filing]. The firm’s portfolio includes companies in technology, entertainment, gaming, and cybersecurity.
Investment Rationale and Share Acquisition
Pale Fire Capital currently holds 2.6 million Ziff Davis shares. Jan Barta explained the investment, stating that the firm identified a significant disparity between the value of Ziff Davis’s individual divisions and its overall market valuation. “It is a conglomerate of technological assets, where we saw a great value of the individual divisions, which was far higher than the value of the entire Ziff Davis company on the stock exchange. That is why we bought massively in the last few days,” Barta commented.
The investment group began building its position in Ziff Davis in early 2025, acquiring shares at an average price of $35.62, valuing the block of shares at approximately $92.6 million [Pale Fire Capital]. But, other reports value the shares at around $77 million [the13dreport.com].
Impact of Division Sale and Stock Performance
The timing of Pale Fire Capital’s investment coincided with a significant development for Ziff Davis. On Tuesday, the company announced the sale of one of its five divisions to Accenture for $1.2 billion. This news triggered a substantial increase in ZD’s share price, rising from $28 to $49.52 on the Nasdaq before settling at $41.46, representing a daily increase of approximately 48 percent.
Barta highlighted the positive implications of the sale, noting that Ziff Davis would receive roughly $1 billion after taxes. “From this sale, after taxes, ZD will receive approximately one billion dollars, which at yesterday’s stock price would value the entire rest of the company at $300 million, with the remaining three divisions of the company making up eighty percent of ZD’s profit,” he added.
Prior to the sale announcement, Ziff Davis shares had experienced a decline, falling from around $39 to $28 over the preceding twelve months. While Wednesday’s price increase offered some recovery, the shares had only increased by 6.1 percent during that period.
Potential Risks and Broader Investment Strategy
Portfolio manager Tomáš Pfeiler of Cyrrus cautioned about potential risks, noting that the business could be susceptible to disruption from artificial intelligence.
Pale Fire Capital’s recent investments share a common theme: targeting companies that are currently undervalued and facing market skepticism. This strategy is likewise evident in their investments in Phreesia and Angi, where the firm believes these companies can improve their financial performance.
Pale Fire Capital’s Investment Portfolio
Pale Fire Capital invests across a diverse range of industries, including technology, gold mining, software, and food. Its largest holdings include discount portal Groupon and B2Gold, a Canadian mining company with operations in Mali, Namibia, and the Philippines. Dušan Šenkypl was awarded EY Entrepreneur of the Year 2025 of the Czech Republic.