Playing the Stock Market with Search

[cryptblade]

How many of you held stock in Aquantive when Microsoft bought it out? What about holders of Yahoo or Google or Amazon? Or Omniture and Websidestory?

I'm curious how many of you out there are playing the stock market based on companies you know through the search and online marketing industry.

The clear big heads are Google (GOOG) and Yahoo (YHOO) (...and Microsoft I guess...). There's also Ebay (EBAY) and Amazon (AMZN).

There's Valueclick (VCLK)- in which there are talks about it as a takeover candidate after Doubleclick's takeover and Aquantive's takeover.

I got into Omniture (OMTR) at the beginning of the 2007 and it has nearly doubled since then. Websidestory is also traded publicly WSSI. However, Omniture is up over rumors of a takeover.

On the international search front, there's Baidu (BIDU) - the Chinese "google"

Anything else people are looking or invested into? I'm curious if people in the search industry are investing in stocks of companies that we know?

[NewKidOnTheBlock]

I remeber that Aaron Wall was trying to do exactly this. On his blog (seobook.com) he has a section about the stock market I think.

In the end he stopped it, b/c he realized he could make more money from Google's index than from their stock (in his words).

I checked some of the predictions he made...for example once there were some news in the search industry that somebody left a search company (or another internet company?) who was known to be one of their most important guys and the stock hardly changed..which made him curious to get into that stock thinking he had insider information on that stock and that the market had not yet reacted to it.

Anyway I checked this one and the market didn't react after it, either....

So my guess is that even if we think we do have insider information by being in the industry there are other people a lot closer to the source who find out about it earlier than us little guys even if we're big into search/the web.

I guess its sort of like sports betting: You "Only" have to make 53% or more on your bets and youre winning money. And you dont have to beat the oddsmakers (they only make the odds so 50% of the money is on each side of the bet..they make their money through commissions) you "only" have to beat the average sports bettor.

However the problem with this is that even if the number of average sports bettors who have no system/idea what they bet on really and whether a line represents a good opportunity or not outnumber the number of professional sports bettors by far...the professional sports bettors apparently have the majority of money in the game (sort of like the 80/20 rule...20% of the bettors have 80% of the money in the game...maybe its even like 2% have 90% in it?..).

I wouldnt be surprised if this wasnt any diff. in the stock market. You can probably easily outperform the average investor/trader who buys/sells search stocks. But you probably wont have an easy time outperforming the big investors who invest into those companies/trade companies in the search space. And they're probably the majority of your competition (by amount of money/shares).

I dont want to discourage you, though. If you can use your search knowledge to make profits in the stock market that would be real nice.

[cryptblade]

I'm not talking about using search and news as conjecture into "insider information"

I mean more for..."value" stock trades. For example, how many people bought into Google? How many people held Doubleclick or Aquantive before they were bought up?

I, for one, hold stock in Omniture because I know they are best of breed for analytics. They were cheap when I got into them. They've doubled since I got into them. Pretty cool.

But, I am curious about people taking time to build up their portfolio. Think about. You might make a lot of money "gaming" the engines, but you ain't gonna put all that money into the bank right? Portfolio investment helps with the slight passive income...unless you put it all into annuities then.. well.. you know.

Anyway, I am still curious if there are other people here. I know there are Aquantive, Avenue A Razorfish people here, Overstock, and all them others who aren't purely in search! Come on yall! Come out of the shadows!

[NewKidOnTheBlock]

I didnt mean it as in "insider information" with a negative connotation just in case that's what it came across(?).

But anyways, sorry for the little misunderstanding, I think I see what you mean now. and good luck! of course

[cryptblade]

I didnt mean it as in "insider information" with a negative connotation just in case that's what it came across(?).

But anyways, sorry for the little misunderstanding, I think I see what you mean now. and good luck! of course

Nah - it'd be too easy if search gave investors that kind of advantage. Trust me - investment managers, day traders - they are smart. If search was THAT GOOD - oh baby, search engines would be even bigger darlings of the business world & the Feds would be all over Google and Yahoo by now. ...I wish it WERE that easy, heh.

Here's another thought. How many people bought into RIMM - the Blackberry people - because of our industry? I mean, we KNOW how important technology gadgets are, especially mobile gadgets. Are there others here playing the market based on work experience and what they know?

I worked at a company that used Salesforce (CRM) and repackaged Salesforce and sold it to other clients (as a distributor). I took a look into Salesforce knowing it was public. Got into the company when it was low and sold when it went up $10 per share (it's now lower than when I sold - heh!). I made a nice profit.

I'd be curious about the SEM industry. These guys are more poised for knowing what companies and stock plays there are compared to SEO. I mean, look at Aquantive and Doubleclick - bought up and private now. What about Valueclick or Aptimus? Omniture is up really because of the SEM industry and interactive advertising, not because of SEO.

I would imagine some smart people here know about infrastructure companies that provide technology, hardware, software, and services that help other companies involved in SEM do things or make money.

[mcanerin]

I have a Yahoo stock story.

A long time ago (1994-ish) I had a site that was the third most popular site in Canada, and was basically a directory that highlighted Canadian sites. I had tons of other links but I put a little maple leaf beside the Canadian ones, which at the time was unusual and useful, I suppose.

Anyway, one day I came across this cool site run by a student at Stanford named jyang. The directory was great, though it had a silly name (Yahoo). I sent him an email saying I liked his site and noticed he didn't have a lot of Canadian links. I also wanted to grab a bunch of his. We were both students so we basically agreed to swap links. Later, I decided to use my law degree in the private sector, since I didn't see a great way to monetize my site, at the time. :o

Anyway, a couple years later, I was walking by a newsstand and noticed that an issue of Barrons featured Yahoo as going IPO. SInce I was working with a small public company at the time (mostly for stock options), I was interested and read the article.

Funny thing was, Barrons thought that the stock was interesting, was concerned about monetization, and didn't really recommend buying. The reviewer said something to the effect that if you bought it, it would likely be a "nice ride".

I had more faith in Jerry's project and bought as much stock as I could on IPO day. Due to how I bought it (long story) I had to sell that day, as well. I remember trying to buy at 9.50 but by the time my broker was able to put in the order it was already at around 18. I sold (reluctantly) a few hours later when it hit 36 or so, netting me a bit of a profit. Not bad for a couple hours work.

My links probably went on to seed Yahoo Canada, and of course I regret not being able to keep my Yahoo shares. I think that's one of the things that got me back into search - thinking back on thosed missed opportunities. I have a similar e-Bay story, as well. <sigh>

I'm not necessarily bullish on "search" per se, but I am and always will be bullish on people wanting to become informed, entertained, and to communicate with each other, which search does well.

I created a "Sex, Drugs and Rock and Roll" mutual fund back in the 90's, which invested in companies like Playboy, P&G, and Sony, which was lots of fun and made some nice cash for me. I always wanted to create a mutual fund-type portolio based on the search industry. I think it would be cool.

Ian

[cryptblade]

Ian! That's what's up!

I know there are people here savvy enough between search & online marketing, and know what companies to invest in - just because they know.

I mean seriously, if you know the value of a public company that does work in this industry - search, interactive marketing, interactive advertising, ecommerce, tec - then it's logical to at least consider investing in that company.

Going back to Omniture, for example, who decided to get into them? There are threads here talking about Omniture and analytics. Those of us in this industry would know who's good and who's bad.

Actually, if we look at the interactive marketing industry, across the board the public companies are doing well. This is after Aquantive's takeover and talks of a possible buyout of Valueclick (VCLK).

There's Digital River (DRIV), Miva (MIVA), and Traffix (TRFX). All rose up today...looks neat to me

[cryptblade]

I was researching OMTR (I own it and it's good to keep research on stocks you own so you know when to cash in or load up, etc.).

Now, those who watch CNBC or read business books probably have heard of Jim Cramer. He's talked about Google, Yahoo, and of course, Omniture. He actually gets it with Omniture - and one of his sites, TheStreet.com signed up with them.

Anyway, in researching the company, I found a lot of investors who decided to get int Omniture purely on HIS recommendation and not on their own research. And when other investors chime in, they talk about the earnings and take over speculations, blah blah blah.

My take on it is, based on my experience/profession in the search industry, Omniture is a long term play. Those who are SEMs or hiring for SEMs - one of the job requirements I increasingly see is Web Analytics.

Big companies looking to hire in-house people know that analytics is uber important. Analytics = information; user behavior information. Information = mission critical for any website and business.

We, as search professionals, also know that while there are free analytics programs like Google Analytics, the free ones are only effective up to a certain point (features and/or traffic). Once a website crosses a threshold in traffic, the free analytics must become commercial (Google Analytics has a commercial for pay version for larger sites).

Now, when it comes to commercial versions of analytics, Google is no longer a factor. Omniture, Websidestory, Webtrends, and Coremetrix are in the top. Omniture seems to be the darling of the analytics companies. As of now, I'm seeing them as a sponsor of this forum. I dont see Websidestory sponsoring here.

Websidestory, up until a few months ago, was trading as WSSI. It is now VSCN - Visual Sciences, Inc. But, stock price is around $15 per share - a big difference compared to Omniture.

I think for us, we are in a unique position to be VALUE INVESTORS. We see and use the products or services of these companies. We can be a better judge of the value of the stocks - whether it's good or not - based on our more intimate knowledge and experience. Prudent investing is still necessary (such as evaluating whether or not to buy a stock even if you love it - but is it "on sale"?).

Valueclick (VCLK) is another company with talks of possible takeover and seems to be the "best" player so far - but balanced by Digital River (DRIV). Digital River, when looking at the numbers, doesn't look too bad either and may actually be the hidden gem.

[cryptblade]

Taking a look at some stocks today, I decided to look into VCLK, DRIV, and GSIC. These are Valueclick, Digital River, and GSI Commerce respectively.

Now in some stock/company profiles, DRIV is listed in direct competition with GSIC, EDS, and ACN (Accenture).

This is pretty interesting since EDS and ACN are both companies I would not intuitively link with DRIV. But DRIV does engage in a lot more technology and systems development than VCLK does.

Valueclick is strictly focused on advertising and interactive marketing/advertising technology systems. Applications for analysis, driving performance, and leveraged marketing/advertising platforms are Valueclick's focus. Today, at least, it seems to be to their detriment as the stock is not doing so hot. Analysts aren't rating Valueclick very highly either.

GSI is similarly not doing so well today as the stock is down. And analysts don't like them either.

DRIV is doing great - and analysts love this stock. Looking at the financials of all three companies, DRIV does look a lot brighter. At about $48 a share today, it sure doesn't look bad (I'm not a stock analyst so I'm not going into high detail about the P/E or EPS or multiple, etc.)

What's interesting is if we look at the past 1 year for all three stocks, DRIV has been up and down. In fact it's lower than it was just 2 months ago and only a little higher than it was a year ago.

VCLK and GSIC both, however, are up from a year ago - way up. To me, it looks like interactive agencies are worthy of investment - and with the acquisitions of Aquantive, Doubleclick, and Real Media - it may pay to give more attention to the acquisitions goin on in this space.

Refinery - not publicly traded - was acquired by WPPGY - a UK advertising and media firm: http://biz.yahoo.com/ap/070705/wpp_refinery.html?.v=1

Could be very interesting to track all of this particularly as the industry seems to be coalescing and the search/interactive realm blends into the larger MEDIA realm.

[VictorEdinian]

Funny thing is that my current client is involved in in-depth stock and option research and after thinking about it, I'd say buy the company that makes best sense to you.

I bought Yhoo when YPN came out hoping and hunching that it would really rival AdSense and drive more click revenue to a dinosaur that needed it.

What happened? I lost $8k (not much, but still)

Management and other factors come into play too. Bottom line, when it's your dough, diversify a little, just in case....

[cryptblade]

Good point. The risk of the stock market still requires someone who knows how to invest, game the market, or whatever.

I wouldn't recommend anyone to "bet" on the stock market, but I am sure there are savvy investors in our industry who are also interested in stocks. And IMHO, given our profession, we can detect a good VALUE stock.

Warren Buffet is the example of a value stock investor. A guiding principle is if you are a customer of the company, then you could be an investor. But the company's financials have to make sense.

Looking at Google vs. Yahoo, GOOG's financials make more sense than Yahoo's. And as you said, other factors like the management makes a big difference.

Even with Terry Semel out of Yahoo (well..the CEO role that is..) Yahoo is still down. If someone is doing a value investment, Yahoo makes no sense. Google seems to do no wrong.

[cryptblade]

Here's a question to all the International SEOs/SEMs out there. With the news on shoddy Chinese goods increasing to everything from pet food to toothpaste, stock investors - and consumers - are cautious towards China.

Fortunately, the Internet is a little bit more insular from that. Are there people buying into Chinese Internet companies like Baidu (BIDU)?

In this case, BIDU would be either a trade or value stock. Has anyone looked into this?

[mcanerin]

Baidu isn't so good as a search engine, but it's pretty good at making money. The Chinese have a tendency (I'm obviously talking here about mainland Chinese who are new to the stock market, not people of Chinese descent in general) tend to trade on rumor, so the ride would probably be very, uh,.. interesting...

I don't know about them as a long term hold, but if you are a day trader or have a high tolerance for risk/reward, Baidu could be fun. But I would use my "fun money", not my life savings, if you catch my meaning.

In Asia, Overture is a very good bet, IMO. Google? Iffy. They are considered "too American" by most. Live isn't on the radar at the moment, but should not be considered out.

Where I would be looking is mobile search and advertising.

Ian

PS: The above is personal opinion only. I'm not a stock market expert, related to the above companies, or a shill. I just do a lot of search related activities in Asia. Caveat Emptor.

[cryptblade]

In Asia, Overture is a very good bet, IMO. Google? Iffy. They are considered "too American" by most. Live isn't on the radar at the moment, but should not be considered out.

Where I would be looking is mobile search and advertising.

Very interesting point. If you pay attention to business/investment news, the BIG trades/investments are in international companies. Either Multinational companies or companies outside of the US.

The mobile market is definitely big in Asia and other countries. The advertising bit is interesting - could be worth speculating on some companies with big or growing mobile advertising units.

with the iPhone out - it would be interesting to see how that changes things on the Asian Rim - if it does; have not heard anything from the stock experts tho.

[beu]

Yeah, I don't know if Baidu is really the Google of China. Google hasn't been in China as long. I'd give "search" in China some more time! Don't forget there may be 1,321,851,888 folks living in China but, I'm pretty sure the country still censors results. Because of censorship, returning relevant results may prove to be "tricky"! As soon as Google figures out how to handle censorship with an algorithm it may be a whole new ball game in China!

I don't know a lick of Chinese but, here is what I get when I compare a Google.com image search for "tiananmen square" with a Google.cn image search for that same term.

Google.com
http://images.google.com/images?um=1&tab=wi&hl=en&rlz=1B3GGGL_enUS229US230&q=tiananmen%20square
Google.cn
http://images.google.cn/images?complete=1&hl=zh-CN&q=tiananmen%20square&btnG=Google+%E6%90%9C%E7%B4%A2&ie=UTF-8&oe=UTF-8&um=1&sa=N&tab=wi

As far as Omniture, I have several big name clients who spent $100k+ last year and then dumped Omniture for Google Analytics (Urchin). So, I wouldn't consider Omniture a wise long term investment at all!

[cryptblade]

That's an interesting point of view regarding OMTR. You might be right in terms of NOT a long term hold because some analysts believe it'll be taken over by this time next year. Which actually makes it a good one to buy now - and sell later...depending on who buys it of course.

...oh if only Google would....

BIDU seems to be doing ok with the share price. But if you are interested in the markets, BIDU could be a good TRADE - but not a long term hold.

[NewKidOnTheBlock]

This is off-topic, but if you want to see a market discrepancy read it ;)

My take on it is, based on my experience/profession in the search industry, Omniture is a long term play. Those who are SEMs or hiring for SEMs - one of the job requirements I increasingly see is Web Analytics.

In the US salaries for fulltime web analytics positions are approaching 100,000$ (adjusted by region/experience). The market is booming.

In Europe, however there are virtually no fulltime web analytics positions available (frequent topic of discussion in the w. analytics industry), yet...lol

[mcanerin]

Just so there is no confusion, there is a big difference between Omniture (an analytics company) and Overture (which in the US is now Yahoo Search marketing, but in Asia is still a separate, and very successful company).

Yahoo/Overture pretty much *own* search in Japan and have a very strong holding in Korea, Taiwan and China.

Baidu is the most popular search engine in China, but mostly for teens searching for free content, not business people looking for suppliers. Google shows much better in the business and academic world, which of course is where they want to.

Censorship in China is always an issue, but in practice 1) the Chinese don't tend to search for the square - they are usually searching for business ideas, suppliers, etc instead. 2) every search engine in China is censored, not just Google, so there is no inherent advantage of one over the other - level playing field.

Ian

[cryptblade]

In the US salaries for fulltime web analytics positions are approaching 100,000$ (adjusted by region/experience). The market is booming.

This is really from left field for me. I remember a couple of years ago NOBODY talked about analytics as a specific skill. It was all looped into "analyze" campaigns or websites.

I guess if companies are investing in commercial analytics programs worth several thousand $$$ a year, it makes sense that they have someone specifically skilled to interpret information for them.

...just a year ago I was still spending time explaining to people the difference between a "hit" and a site visitor. Geez.

[cryptblade]

Actually it's very interesting to look for a stock play in this industry based on non-US markets. I definitely like Ian's take on mobile marketing/advertising.

YHOO's earnings aren't reflective of their potential of ownership in Asia. That's too bad. Maybe Jerry Yang (as an Asian himself) can see more potential and expansion?

That being said - has anyone looked at interactive marketing agencies as investments?

Valueclick (VCLK), Digital River (DRIV), GSI Commerce (GSIC), and E.W.Scripps (SSP) are companies with interactive marketing components and properties. Not all are exactly the same and/or direct competitors, but they all provide platforms for e-commerce. Valueclick has services, ad-networks, etc. Digital River has the same. GSI does a lot of ecommerce sites. E.W. Scripps has ad-networks and content and portal platforms (like Bizrate) for e-commerce.

While I feel e-commerce retailers are the same as regular retailers - i.e. risky - I find the agencies to be interesting; especially those that are leveraged with different properties.

Anybody with any opinions or thoughts?

[Discovery]

My two cents is that the real profits in the market are made by insiders - I dont mean insider trading, but insiders such as analysts, employees and founders. Core users such as us advertisers/developers/power users of the net have a slight advantage over Joe I read fortune magazine last week, but we are still WAY late in the game of identifying and investing in companies at the ground floor.

The best we can do with our knowledge is to continously look over the horizon, seeking out companies who are just emerging who are offering solutions to our core problems or dream solutions.

Outside of the big 3 what currently unkown companies...
will capture the mobil ad marketplace?
will capture internet TV?
will be the main players in the hyperlocal space?
will overthrow physical cable with Wi-Max?

Discovery

[beu]

Outside of the big 3 what currently unkown companies...
will capture the mobil ad marketplace?
will capture internet TV?
will be the main players in the hyperlocal space?
will overthrow physical cable with Wi-Max?

Answer = None!



Google will buy them before they make it that far! :)

[AussieWebmaster]

I got Gooigle at 108, Baidu at 28 and Yahoo at 28.5....

I want to get into Alibaba - the Asian EBay

[Discovery]

Correct Beu, and thus that should make it a good investment!

I really like the area of Wi-Max and mobil tech right now.

Discovery

[cryptblade]

GOOG was lagging behind around $450-475 per share around the first quarter and early second quarter. But BOOM! They've taken off.

Can't really count against GOOG. They recently bought Postini. Not sure - but if they keep shoring up their on-demand enterprise services/software, Salesforce COULD be a takeover company (they already work well together). Salesforce = CRM. THAT could be cool (since CRM's stock has been lackluster since the beginning of 2007).

As for the "insiders" - I think they are a non-factor. They will probably always make more money than any of us can on stocks - but that's THEIR industry. We will always make more (or know more) than any outsider coming into our industry.

That being said, outsiders into our industry can still make money. We too can make money on the market.

I look at interactive ad agencies like VCLK and DRIV and see that #1 over the long haul, they've increased and #2 they are doing well now. Not to mention that more and more companies realize that Interactive marketing & communication is critical; which means any interactive ad agencies really need to be masters of media.

There are lots of plays out there, I'm convinced. I'm just curious what other plays people have pursued.

[BostonGekko]

My 2-cents...

1. I'm surprised nobody asked Beu to provide more insight into the Omniture defections. I also bought OMTR stock, so I'm curious as to the extent of customers giving it up for Google. The company claims a 95% renewal rate. That's high, but still leaves plenty of room for customer losses. I also have to wonder how many people fiddle with Google, then realize they need Omniture. FYI, I've also heard that Omniture has been stealing customers away from WebTrends. Anyone else picking up on that?

2. I agree that there is an advantage associated with knowing a product in a way that most don't. I've made some nice returns over the years using of that advantage. With larger companies like Google, it's not worth trying to beat the Street. With that much market cap at stake, their resource trumps our knowledge. But don't give Wall Street too much credit! With smaller companies like Omniture, there isn't as much to gain. Thus, we can have an edge.

[AussieWebmaster]

Yahoo seems to have forgotten which way is up....

[cryptblade]

Webtrends, Coremetric - they are private, so guess we cant say whether they are good or not as investments.

SMBs - they probably dont need Omniture. Larger Medium to large companies do. Most of the companies that I see Omniture signing up are not the small or medium-sized companies - they are big companies. Same thing with Websidestory/Hitbox/VSCN.

I see OMTR's business model much like Salesforce and others via the on-demand subscription. So long as you pay the subscription, you get the service.

There are Open-Source (free) CRMs and free Analytics (Google Analytics). But all are limited in their offering. More service and features requires more work. Companies that can afford to invest in such tools will.

I think OMTR is able to effectively address free Google Analytics vs. OMTR. If you do a search for SugarCRM, you'll find Salesforce with a PPC ad about Salesforce vs. SugarCRM.

Also, support is an issue at enterprise levels. I have not seen anything about Google Analytics support from Google - so that would be a problem.

Could OMTR eventually give way to Google? Probably - but Google has to show that it can handle this aspect outside of search. Even though GOOG is buying up companies to provide enterprise level applications on-demand, they have yet to show they can make an effective dent into those markets.

But, the market is still all about the numbers. One CEO could have been good for one company but not for another. Terry Semel was a good CEO before Yahoo and he lead Yahoo through the dotcom bubble burst. But he was not effective post the burst.

In the case of OMTR, their numbers look strong and they can probably keep that up for another year. For us, we can probably go long on OMTR, say a 1 year, then evaluate.

But then, that's playing the market.

[beu]

My 2-cents...
1. I'm surprised nobody asked Beu to provide more insight into the Omniture defections.
Sure, let me start of by saying I work for a "Top 20" ad agency and that my comments are based on Omniture's ability to track traffic from, as well as glean data for "natural search". The problems we have seen are mostly related to natural search and not paid search. These issues make reporting and showing results more difficult.

Here are a three examples:
- tracking through 301 and/or 302 redirects
- tracking user errors (ie 404)
- tracking user agents (ie Googlebot)

I also bought OMTR stock, so I'm curious as to the extent of customers giving it up for Google.
I'm not aware of any data on that topic. Clients switching from Omniture to Google Analytics is a trend I'm seeing as major clients enter the natural search arena. The original "paid" version of Google Analytics, Urchin is still available:
http://www.google.com/analytics/urchin_software.html

When Google bought Urchin, it was one of the best analytics packages available.

FYI, I've also heard that Omniture has been stealing customers away from WebTrends. Anyone else picking up on that?
I believe this to be true.

2. I agree that there is an advantage associated with knowing a product in a way that most don't. I've made some nice returns over the years using of that advantage.
So true, I just don't see Omniture as a long term investment unless upgrades and enhancements are made.

*Just to disclose, I do have financial interests in Google but not in Omniture.

[cryptblade]

Man...my holdings have taken a beating. But for me, I see this a great time to pick up some stocks there were a little too pricey for me.

GOOG is below $500 a share. I think we can all agree this is a great time to pick up more GOOG. No matter how the industry goes, we KNOW GOOG is good. GOOG has worldwide reach - revenue comes from global regions, not just the US. GOOG is perfect.

AAPL looks good too. HPQ is still strong. In fact Tech sector is pretty strong. OMTR retreated a little but they have stayed fairly strong.

..Beu if you got into to GOOG way below $500, I'm jealous. But good for you man. I want my piece! ;)

[AussieWebmaster]

Yahoo is a good play

[cryptblade]

Yahoo is a good play

You think? How so? Haven't seen much coming from them. Not in acquisitions, new launches. I think their price already factors in Panama. Terry Semel's departure didn't help it either.

But then again, I think you mentioned that Yahoo has a big part of the Asian market, yes?