I listen to a lot of investing podcasts these days and most of the guys I listen to will tell you that insider activity can often assist in figuring out whether or not a stock is going to trend up or down. For instance, when a stock is getting ready to IPO and all of a sudden 20% more shares open up (can anyone guess my example?), it usually means a lot of initial investors are ready to get out! While real insider activity is interesting and useful, I would rather go through hypotheticals that are funny and provide no real education to my viewers. So here we are.
Insider Move #1
Insider Activity: Members of congress begin buying massive amounts of Raytheon stock.
While it wouldn't be surprising if many congressional members already own tons of defense stocks, based of their protectionist attitude towards defense procurement, massive buys can only mean one thing: WAR WITH IRAN!!! Raytheon creates cruise missiles, which since America tends not to like the negative pub of soldier fatality, would rather launch a shit ton of Raytheon's own Tomahawk Cruise missiles.
Insider Move #2
Insider Activity: Center of Disease Control Scientists invest in Smith and Wesson holdings as well as Hostess
What do ammunition and twinkies have in common? They make great companions during the ZOMBIE APOCALYPSE! When stock in a zombie wasteland there are 2 things every Walking Dead fan knows: you can never have enough bullets and having anything you can eat without creating fire is always a plus. Now, you are probably thinking, why would anyone buy hostess when there are a ton of other stocks that would provide real nourishment? You have to think like the market! When you think of food lasting forever, what do you think of? Twinkies!!!
Insider Move #3
Insider Activity: Warren Buffet buys copious amounts of Baidu stock, reduces his position in Google.
This one is simple: China is taking over the world. As any investor knows, when Buffet buys he tends to know what hes doing. Buffet usually invests in relatively safe, large cap stocks which are normally not like Baidu (Chinas largest search engine), so its a sign of the death of capitalism. Everyone make sure to buy plenty of red clothing!
Insider Move #4
Insider Activity: Bobby Brown buys large volume of Coke stock
This likely means that Bobby Brown discovered the internet and decided to research the stock market: good for him! Warren Buffet told him to buy stocks that he believes in and he did.
Final Note
While my previous text was all fun (hopefully) and games, it is important to take into account insider activity for a company. When stocks are down and those who run the company are purchasing more stock options, it usually means they think the down is a temporary one. They know the company and financial specifics more than anyone, so they can give away a lot of information. Joel Greenblatt, author of "You Can Be a Stock Market Genius" talks about how when looking at potential trading, insider trading is a big factor in his decision making, especially when it comes to unknown entities like spinoffs and mergers.
Tuesday, June 26, 2012
Thursday, June 21, 2012
Fantasy Football: Value Picks Part 1
The NFL season is coming upon us and I thought it would be a good time to list of the guys I will be aiming for during my drafts. You will often see fantasy gurus have "sleeper" lists, but I think more important than ranking guys based off breakout potential, is picking guys who are undervalued. Selecting Matthew Stafford in the 1st round as a sleeper makes no sense, because you are drafting him as if his potential was his actual value. Here are some guys who I like this year as value picks, based of their expected draft rankings and potential for the year.
Not who you would expect as the 1st guy on my list no? Well he is. Why would I pick someone who is coming off his worst season since 2004 and who is on the wrong side of 30? Because for a guy who CBS has ranked as the 30th best WR in fantasy this year, he is a sure lock for 1000 yards and at least 6 TD. In a 10 team league, you can possibly get Wayne as your 3rd WR!
Last year he had literally the worst combination of arms throwing to him in the NFL. Painter and Orlovsky (I'm sure I spelled that wrong, but he doesn't merit the fix) make ANYONE an upgrade the following year. Now, he has Andrew Luck who I have little doubt will have a solid first season in the NFL. Wayne is far away the best option for Luck, who has no problems fitting the ball into receivers who are not built around speed, as he did at Stanford. With no Garcon, Clark, Gonzales, it shouldn't take long for Wayne to become Luck's best target.
Prior to last year, Wayne had experienced 7 straight years of 1,000 plus yards with a ton of talent around him. I think he restarts his 1,000 yard streak with his new #1 pick and is a great value towards the 8th round and above. Instead of gambling on big seasons by Torrey Smith and Brandon Lloyd, get a guy who is a lock to at least match last years stats and possibly put up a 1200+ yard season.
I have no idea where Redman will be going off the boards come draft time, but I know that he is going to be THE running back for the Steelers for at least the 1st half of the season. Even if Mendenhall can come back and be productive, I think its for 10 carries a game and not around the goaline. ACL injuries can be tough and its not like Mendenhall was Adrian Peterson before the injury. CBS has Redman ranked at around the 30th best back, near the likes of Willis Mcgahee and Roy Helu. Redman will get 20+ carries a game for a team that wants to get back to its "roots". I'll take Redman.
Issac averaged over 4.4 yards per carry last year and in the 2 games after Mendenhalls injury, put up 92 and 121 yards. He runs hard and through his blocks, which is what the Steelers will want. I believe he is the best bet for a 3rd RB to crack 1,000 yards and 10 TD.
In 2010 Dallas Clarke was injured for 10 games in what would be Peyton Mannings last year with the Colts. In those 10 games, Jacob Tamme caught 67 passes for 631 yards as a starter. Denver does not have nearly the firepower of the 2010 colts, which makes Tamme all the more likely to be a #1 or #2 target for Manning. Instead of reaching for a Celek or Gresham, wait out your draft and take Tamme as a 3rd tier TE.
Thomas and Decker will get their looks, but Manning has always loved his guys who sit under the safeties and soak up yards. Thomas and Decker are also unproven in the red zone, which makes me like Tamme all the more so. I think Tamme is a lock for 800 yards with at least 8 TD. That is a low prediction.
Lets just put it this way: it can't get any worse (so we hope) that 2011. After an impressive 2010, Freeman put up one of the worst seasons of any QB last year and made all the gurus who picked him as a breakout player look insane. 22 Interceptions is insanely high, but I think that number will be halved in 2012.
Freeman has a great core of talent around him with two receivers who can go get it, a TE who he can lean on to move the chains and 2 RBs who will keep defenses in running formations. Even though Freeman was terrible last year at keeping the ball, he still passed at over 62%, which makes me think it was more poor decision making than anything else. The Bucs upgraded every aspect of their offense and I think a more cerebral Sciano will create an offense that works for Freeman.
Freeman appears to be available after the top 10 QB's are off the board (CBS has him at 18 or 21) so he is a great backup who has the potential to take over if things go right. He had 25 TD's in 2010 without Jackson or Clarke, so I believe the sky is the limit for Freeman. But what if he doesn't improve? Well, you drafted him as your 2nd QB so its ok.
Monday, June 18, 2012
Going, Going, Gone...
Here are my picks for the month, in the 1st edition of my Going, Going, Gone segment. I pick 2 stocks that I like, and one (or sector) that is now off my radar.
Going (Long Buy): 3D Systems Corporation (DDD)
I bought some stock in February as a long term play and little did I know the stock would shoot up the charts in just 4 months. I am already up over 30%, which is including a 2 month drop off in the market. I'm not telling you to look into the stock because of how well it has done for me, because short term gains are a dime a dozen, but rather because 3D printing technology could play a huge role in the next industrial revolution (more likely just a mini revolution).
While 3D printing is still really the "technology of the future", it is already becoming profitable without even having reached its potential. 3D Systems is already pulling in $0.68 per share. While the P/E is high at 45, that is not bad for a VERY high potential growth pick. 3D printing has the potential to help move manufacturing jobs back to America, getting trained staff to run the machinery and programming for the machines, since the machine does all the labor. There was a great article about 3D printing in the Economist, which spoke to the potential of large 3D printing devices that could build specialized pieces for aircraft, vehicles and literally anything you could want to manufacture. While its not there yet, I will happily own the stock of the company with some of the most affordable and efficient technology yet.
Going (1 Year Short Buy): Take-Two Interactive (TTWO)
Some will call me crazy for this one, but I got a gut feeling. Revenue was down last quarter...yet again, but anyone who knows gaming knows this company has some top tier gaming titles, two that are on the horizon. Including...
Take-Two needs some help and I believe GTA 5 (release Fall 2012) and the new Bio Shock (release March 2013) will be just what they need. Both of these games will sell like hot cakes and push some serious revenue. When Bioshock 1 came out in August 2007, this stock surged up. When GTA 4 came out in February 2008, this stock went up over 50% in just a month. These could be the last 2 big titles from TTWO before the release of the next generation systems and I want to buy in low. It sounds like they are not renewing their biggest bust (the 2k baseball series, which has been operating at over a 50% loss) and have started to develop mobile games (like bringing old PS2 games to the apple app store). I buy this stock at under 10 and watch it shoot through the roof with the release of GTA 5, then sell when it begins to taper off for a nice gain.
Gone (Stay away, Sell): European Banks
I went the easy way with this one. Its not that these institutions are all bad or mismanaged, its that they all are connected to the Euro and I don't see Spain, Portugal, Ireland, Greece and Italy fixing their woes any time soon. The banks will be the support during these hard times and that means growth could be non existent...or worse. I also believe that other areas in Europe will grow before the banks do, such as manufacturing and technology.
Now, once the other sectors start to show life again (real growth), then maybe European banks become a nice buy low target. That being said, I think this last Spanish bailout will surely not be the last, so I would recommend selling or holding back on trying to buy low on European banks. Plenty of good banks in other continents where economies are actually showing signs of recovery.
Going (Long Buy): 3D Systems Corporation (DDD)
I bought some stock in February as a long term play and little did I know the stock would shoot up the charts in just 4 months. I am already up over 30%, which is including a 2 month drop off in the market. I'm not telling you to look into the stock because of how well it has done for me, because short term gains are a dime a dozen, but rather because 3D printing technology could play a huge role in the next industrial revolution (more likely just a mini revolution).
Short video demonstrating the power of 3D printing
Going (1 Year Short Buy): Take-Two Interactive (TTWO)
Some will call me crazy for this one, but I got a gut feeling. Revenue was down last quarter...yet again, but anyone who knows gaming knows this company has some top tier gaming titles, two that are on the horizon. Including...
Take-Two needs some help and I believe GTA 5 (release Fall 2012) and the new Bio Shock (release March 2013) will be just what they need. Both of these games will sell like hot cakes and push some serious revenue. When Bioshock 1 came out in August 2007, this stock surged up. When GTA 4 came out in February 2008, this stock went up over 50% in just a month. These could be the last 2 big titles from TTWO before the release of the next generation systems and I want to buy in low. It sounds like they are not renewing their biggest bust (the 2k baseball series, which has been operating at over a 50% loss) and have started to develop mobile games (like bringing old PS2 games to the apple app store). I buy this stock at under 10 and watch it shoot through the roof with the release of GTA 5, then sell when it begins to taper off for a nice gain.
Gone (Stay away, Sell): European Banks
I went the easy way with this one. Its not that these institutions are all bad or mismanaged, its that they all are connected to the Euro and I don't see Spain, Portugal, Ireland, Greece and Italy fixing their woes any time soon. The banks will be the support during these hard times and that means growth could be non existent...or worse. I also believe that other areas in Europe will grow before the banks do, such as manufacturing and technology.
Now, once the other sectors start to show life again (real growth), then maybe European banks become a nice buy low target. That being said, I think this last Spanish bailout will surely not be the last, so I would recommend selling or holding back on trying to buy low on European banks. Plenty of good banks in other continents where economies are actually showing signs of recovery.
Monday, June 11, 2012
Screw Spain, Bailout Timmy!
From a team that has produced such one year wonders as Shawn Estes, Jesse Foppert, and Jerome Williams (this year doesn't count, he has plenty of time to screw that up), it shouldn't surprise anyone that San Franciscans worry about their pitchers when things go wrong. With an average (at best) offense throughout the last 7 years, we have depended on our staff to carry us and no one has put more on their backs than Tim Lincecum. In 3 of the last 4 years, Tim Lincecum has been in the top 10 of NL pitchers for WAR. The only season he wasn't was 2010, when he decided that his mediocre (when judged by his own resume) season needed to be vindicated by going 4-1 with a 2.4 era and WHIP under 1 in the playoffs.
So I finally have to admit, much like the banks in Spain, that I am worried about our situation. Lincecum has had a few hiccups along the way in his career, including August 2010 where he carried a 0-5 record with a 7.82 era. However, we are now in June and there have only been MINOR signs of recovery (like that choice of diction?) and that is being nice.
Timmy just hasn't looked like the same pitcher. The most common "reason" I have heard for his failures have been the loss of fastball velocity. I understand this concept, but I find it hard to believe that a guy with 2 + secondary pitchers can't deal with losing some life on the fastball. Lets take a closer look, thanks to Fangraphs (one of my two best baseball stat and numbers destinations):
As you can see, Lincecum has lost some velocity before and has been ok. His velocity dropped in 2010 to around 90 mph at one point when he was having issues, but a lot of that was mechanical which Timmy even admitted. I find it hard to believe that you can win a cy young at 92.4 mph and be an all star at 92.2, but no be able to be nearly the same pitcher at 90.2 mph. Matt Cain has dropped from 92.8 mph to just a tick above 90 this season and he has never looked better. Sure, having more velocity helps set up your secondary pitches, but 92 and 90 are not that vastly different. However, the 2 mph drop in velocity could be pointing to issues with mechanics, which would make some sense.
To further disprove the "velocity is the mother of all success" concept, just take a look at fangraphs pitch values found here. His fastball is actually rated higher this year than last year, while his change up and slider have gone from high end plus pitches to negative in their rating. So, is he just not throwing his breaking pitches with the same movement? Sort of, but not enough to come away with anything conclusive. His change up has the exact same downward movement as last year, while his slider has a lost a little bit of horizontal movement. His swing through rates are also pretty much the same. So, his stuff is pretty much the same in terms of movement and velocity, so whats wrong?
Location + Mechanics
Timmy just isn't locating his pitches like he has in previous years. His walk rate is up and from what I have seen of his changeup / slider, he really doesn't seem to know where it is going a lot of the time. In 2008 and 2009, he knew exactly where to locate the changeup, down in the zone or in the dirt. Now it seems like we are seeing that pitch high in the zone more than I can ever remember and in the dirt in counts where he is already behind. In years past, Timmy has had more issues with his windup then in the stretch, but this year appears to be different. In his career with runners on Timmy has actually has a lower batting average and OPS against than when no one is on. This year with RISP: batting average is almost 80 points higher and OPS is over 200 points higher. That screams I cannot locate my pitches when throwing out of the stretch or in a pressure situation.
I'm not going to try to go into details about what is wrong with timmys mechanics out of the stretch, but I do know that with the amount of moving parts he has, getting it right could take some time. Part of it might just be trying to hit the corners too much and he is falling behind, but I find it hard to believe that someone who has won 2 cy young awards is having issues with the pressure of guys on base. Buster Posey mentioned that he thought Timmy was trying to skin the corners a little too much and maybe Timmy just needs to trust his stuff more to get ahead of batters. But his first strike percentage is the highest in his career! If you are getting ahead of batters at the greatest clip in your career and your swinging strike percentages are actually higher than in a year you won a cy young award, I think it means you are giving guys easy takes with your breaking stuff.
In a nutshell:
* Higher first strike percentage than ever before
* Diminished ratings on his secondary pitches, while not losing a lot of movement on them
* Poor RISP numbers, while fairly solid numbers with no one on
* Higher walk rate
These stats point to the fact that Timmy isn't locating his secondary pitches. When you can't find your release point or your motion is off, the ball can go off in any direction. Sometimes you will throw a changeup 10 feet in front of the plate or sometimes you will throw it high where it can be mashed. I am no pitching expert or guru, but these numbers really do push the concept that this is not a velocity issue or a psychological issue, Timmy just isn't hitting his spots when he is ahead of guys.
Timmy needs to get his Dad back in the picture and work on fixing his delivery, because as showcased in August 2010, Timmy can sort of forget how to pitch. This guy is not done and I find it hard to believe that physically he just can't handle the stress of his violent delivery. Its funny, when Timmy is doing well, everyone says his release takes stress off his arm, but when he is doing poorly, its leading to his decline.
Lets just hope he figures it out soon, because baseball is better for everyone when Timmy is throwing his best.
So I finally have to admit, much like the banks in Spain, that I am worried about our situation. Lincecum has had a few hiccups along the way in his career, including August 2010 where he carried a 0-5 record with a 7.82 era. However, we are now in June and there have only been MINOR signs of recovery (like that choice of diction?) and that is being nice.
Timmy just hasn't looked like the same pitcher. The most common "reason" I have heard for his failures have been the loss of fastball velocity. I understand this concept, but I find it hard to believe that a guy with 2 + secondary pitchers can't deal with losing some life on the fastball. Lets take a closer look, thanks to Fangraphs (one of my two best baseball stat and numbers destinations):
| 2007 | 93.6 |
| 2008 | 94 |
| 2009 | 92.4 |
| 2010 | 91.2 |
| 2011 | 92.2 |
| 2012 | 90.2 |
As you can see, Lincecum has lost some velocity before and has been ok. His velocity dropped in 2010 to around 90 mph at one point when he was having issues, but a lot of that was mechanical which Timmy even admitted. I find it hard to believe that you can win a cy young at 92.4 mph and be an all star at 92.2, but no be able to be nearly the same pitcher at 90.2 mph. Matt Cain has dropped from 92.8 mph to just a tick above 90 this season and he has never looked better. Sure, having more velocity helps set up your secondary pitches, but 92 and 90 are not that vastly different. However, the 2 mph drop in velocity could be pointing to issues with mechanics, which would make some sense.
To further disprove the "velocity is the mother of all success" concept, just take a look at fangraphs pitch values found here. His fastball is actually rated higher this year than last year, while his change up and slider have gone from high end plus pitches to negative in their rating. So, is he just not throwing his breaking pitches with the same movement? Sort of, but not enough to come away with anything conclusive. His change up has the exact same downward movement as last year, while his slider has a lost a little bit of horizontal movement. His swing through rates are also pretty much the same. So, his stuff is pretty much the same in terms of movement and velocity, so whats wrong?
Location + Mechanics
Timmy just isn't locating his pitches like he has in previous years. His walk rate is up and from what I have seen of his changeup / slider, he really doesn't seem to know where it is going a lot of the time. In 2008 and 2009, he knew exactly where to locate the changeup, down in the zone or in the dirt. Now it seems like we are seeing that pitch high in the zone more than I can ever remember and in the dirt in counts where he is already behind. In years past, Timmy has had more issues with his windup then in the stretch, but this year appears to be different. In his career with runners on Timmy has actually has a lower batting average and OPS against than when no one is on. This year with RISP: batting average is almost 80 points higher and OPS is over 200 points higher. That screams I cannot locate my pitches when throwing out of the stretch or in a pressure situation.
I'm not going to try to go into details about what is wrong with timmys mechanics out of the stretch, but I do know that with the amount of moving parts he has, getting it right could take some time. Part of it might just be trying to hit the corners too much and he is falling behind, but I find it hard to believe that someone who has won 2 cy young awards is having issues with the pressure of guys on base. Buster Posey mentioned that he thought Timmy was trying to skin the corners a little too much and maybe Timmy just needs to trust his stuff more to get ahead of batters. But his first strike percentage is the highest in his career! If you are getting ahead of batters at the greatest clip in your career and your swinging strike percentages are actually higher than in a year you won a cy young award, I think it means you are giving guys easy takes with your breaking stuff.
In a nutshell:
* Higher first strike percentage than ever before
* Diminished ratings on his secondary pitches, while not losing a lot of movement on them
* Poor RISP numbers, while fairly solid numbers with no one on
* Higher walk rate
These stats point to the fact that Timmy isn't locating his secondary pitches. When you can't find your release point or your motion is off, the ball can go off in any direction. Sometimes you will throw a changeup 10 feet in front of the plate or sometimes you will throw it high where it can be mashed. I am no pitching expert or guru, but these numbers really do push the concept that this is not a velocity issue or a psychological issue, Timmy just isn't hitting his spots when he is ahead of guys.
Timmy needs to get his Dad back in the picture and work on fixing his delivery, because as showcased in August 2010, Timmy can sort of forget how to pitch. This guy is not done and I find it hard to believe that physically he just can't handle the stress of his violent delivery. Its funny, when Timmy is doing well, everyone says his release takes stress off his arm, but when he is doing poorly, its leading to his decline.
Lets just hope he figures it out soon, because baseball is better for everyone when Timmy is throwing his best.
Facebook: the LA Jaguars
The Facebook IPO has created more buzz than any IPO I can remember in my lifetime, which is amazing considering the only thing they sell is unproven display / social advertising. As someone who entered college (2005) at around the same time Facebook was becoming a household name, I have seen both the power and limitations of Facebook. Facebook is not the next myspace, it is the best social media portal in the world when considering both the membership base and the quality of the product. Now that Facebook has dropped below $27 it is being called the biggest bust in IPO history. Now, it is metaphor time.
Facebook stock is basically the LA Jaguars, the Jaguars franchise that has theoretically moved to LA and is scheduled to play in the Coliseum. Why in the world would anyone want to buy into the LA Jaguars (aka Facebook)? Because they have the potential support (revenue) of the biggest available market in the United States. This is the exact reason that Facebook was over valued, the hype of the company and the potential value directed from the volume of users. If Facebook can figure out how to get the "local market" to spend money in the application, it could become a huge cash cow, but that seems awhile away.
Pros:
Maurice Jones-Drew - Steady and loyal user base
While he may not win you a super bowl by himself, you know that if the rest of your team is working to perfection, this guy is going to help win a lot of games. The only problem is, the greatest running back in the world cannot win games alone (Barry Sanders) without a complete team around him, much like having a boat load of users will not make you money without getting them to buy things or click on ads.
City of LA - Large Market audience
The Jaguars are in LA (theoretically), which is great news if the team can play well and be managed correctly. Think Lakers, Dodgers, Angels. If the team starts to perform, you know it will be backed by a HUGE audience, who will create revenue, encourage sponsors and bring football back to LA. While that is great, there are also the Rams, Raiders and Clippers, who never really made it in the city. Without a great product on the field, LA can easily forget about you and move on. Facebook needs its users to click on more ads (which is currently a small percentile compared to Search Engine ads, that have made Google very wealthy) and spend more money on apps / products.
Cons:
Blayne Gabbert - Advertising Model
Facebook advertising has all the potential in the world to be amazing, just like Blayne Gabbert. However it definitely isn't one of the best yet, like Blayne Gabbert. Gabbert had such a poor year last year, that people in the league are starting to wonder that even time to grow, will he ever be a top notch quarterback? A 50% completion percentage at 5 yards a clip is not going to cut it, not even with Maurice Jones-Drew busting up the defense on 1st down. Facebook users claim to have clicked on at least one facebook ad about as much as Gabbert has hit his target down the field. If Gabbert doesn't step up and have a solid year, management might lose confidence and he might not ever become the QB everyone thought he could be.
Mike Sims-Walker - The IPO
Want to talk about over-valued? This guy was supposed to be the next elite receiver ever since he took the field, much like Facebook had the biggest IPO buzz. In his 1st year starting he went for 869 yards and 7 TD, no small feat for a guy playing on a run first team. In fantasy circles, everyone was talking about how this guy was going to be the next TO at 6'2 and built like a rock. He shot up draft boards and was considered in the same territory as Wes Welker and Hines Ward. When you get valued at twice what Google is worth, the expectations are immense and you just might lose some valuation. Not saying Facebook is going to get released by Wall Street like MS-W, but the initial offering proved to be WAY too much.
And for fun...
Justin Blackmon DUI - The GM Exodus
Bad omen to say the least. One of your biggest names that you have obtained, turns around and makes you look like an idiot.
Conclusion: Much like the theoretical LA Jaguars, with Facebook we are going to have to wait and see what they can do before we buy in. Most analysts appear to think Facebook should be valued in the 20-25 range, but due to all the bad publicity it could drop well below that range. Facebook needs to prove that it can not just sustain advertising revenue growth, but make that revenue grow substantially. As an advertiser, Facebook offers a number of nice features, especially regarding targeting and the variety advertising formats available. That being said, Facebook also lacks the quality of ROI features that a Google adwords campaign has. With Google, you can select search terms that show intent to purchase or research, which Facebook advertising currently lacks. I have a gut feeling that the best days for Facebook advertising are ahead of the company, but with the mobile application gaining usage, its vital that Facebook figures out a way to make the mobile platform as profitable.
My recommendation (which is not a professional analyst or broker, so don't actually follow through without doing your own research) is to wait until Facebook figures out how to make money from the mobile apps and then decide whether or not you want to add it your portfolio. If it breaks near the 20 dollar level, I think you will see a lot of those FB haters change their tone and start calling it undervalued for a "high-growth" pick and the stock will begin to climb. While everyone is laughing at FB now, I think it will start to perform once the stink of the IPO has worn off.
Yes, I just compared Facebook to Jaguars...who were moved to LA.
.
Facebook stock is basically the LA Jaguars, the Jaguars franchise that has theoretically moved to LA and is scheduled to play in the Coliseum. Why in the world would anyone want to buy into the LA Jaguars (aka Facebook)? Because they have the potential support (revenue) of the biggest available market in the United States. This is the exact reason that Facebook was over valued, the hype of the company and the potential value directed from the volume of users. If Facebook can figure out how to get the "local market" to spend money in the application, it could become a huge cash cow, but that seems awhile away.
Pros:
Maurice Jones-Drew - Steady and loyal user base
While he may not win you a super bowl by himself, you know that if the rest of your team is working to perfection, this guy is going to help win a lot of games. The only problem is, the greatest running back in the world cannot win games alone (Barry Sanders) without a complete team around him, much like having a boat load of users will not make you money without getting them to buy things or click on ads.
City of LA - Large Market audience
The Jaguars are in LA (theoretically), which is great news if the team can play well and be managed correctly. Think Lakers, Dodgers, Angels. If the team starts to perform, you know it will be backed by a HUGE audience, who will create revenue, encourage sponsors and bring football back to LA. While that is great, there are also the Rams, Raiders and Clippers, who never really made it in the city. Without a great product on the field, LA can easily forget about you and move on. Facebook needs its users to click on more ads (which is currently a small percentile compared to Search Engine ads, that have made Google very wealthy) and spend more money on apps / products.
Cons:
Blayne Gabbert - Advertising Model
Facebook advertising has all the potential in the world to be amazing, just like Blayne Gabbert. However it definitely isn't one of the best yet, like Blayne Gabbert. Gabbert had such a poor year last year, that people in the league are starting to wonder that even time to grow, will he ever be a top notch quarterback? A 50% completion percentage at 5 yards a clip is not going to cut it, not even with Maurice Jones-Drew busting up the defense on 1st down. Facebook users claim to have clicked on at least one facebook ad about as much as Gabbert has hit his target down the field. If Gabbert doesn't step up and have a solid year, management might lose confidence and he might not ever become the QB everyone thought he could be.
Mike Sims-Walker - The IPO
Want to talk about over-valued? This guy was supposed to be the next elite receiver ever since he took the field, much like Facebook had the biggest IPO buzz. In his 1st year starting he went for 869 yards and 7 TD, no small feat for a guy playing on a run first team. In fantasy circles, everyone was talking about how this guy was going to be the next TO at 6'2 and built like a rock. He shot up draft boards and was considered in the same territory as Wes Welker and Hines Ward. When you get valued at twice what Google is worth, the expectations are immense and you just might lose some valuation. Not saying Facebook is going to get released by Wall Street like MS-W, but the initial offering proved to be WAY too much.
And for fun...
Justin Blackmon DUI - The GM Exodus
Bad omen to say the least. One of your biggest names that you have obtained, turns around and makes you look like an idiot.
Conclusion: Much like the theoretical LA Jaguars, with Facebook we are going to have to wait and see what they can do before we buy in. Most analysts appear to think Facebook should be valued in the 20-25 range, but due to all the bad publicity it could drop well below that range. Facebook needs to prove that it can not just sustain advertising revenue growth, but make that revenue grow substantially. As an advertiser, Facebook offers a number of nice features, especially regarding targeting and the variety advertising formats available. That being said, Facebook also lacks the quality of ROI features that a Google adwords campaign has. With Google, you can select search terms that show intent to purchase or research, which Facebook advertising currently lacks. I have a gut feeling that the best days for Facebook advertising are ahead of the company, but with the mobile application gaining usage, its vital that Facebook figures out a way to make the mobile platform as profitable.
My recommendation (which is not a professional analyst or broker, so don't actually follow through without doing your own research) is to wait until Facebook figures out how to make money from the mobile apps and then decide whether or not you want to add it your portfolio. If it breaks near the 20 dollar level, I think you will see a lot of those FB haters change their tone and start calling it undervalued for a "high-growth" pick and the stock will begin to climb. While everyone is laughing at FB now, I think it will start to perform once the stink of the IPO has worn off.
Yes, I just compared Facebook to Jaguars...who were moved to LA.
.
Friday, June 8, 2012
Where the Market Meets the Stadium
I love sports...along with millions of other human beings who dedicate their life to following professional sports. My first attempt at a blog lasted about 3 weeks, spanning the end of the 2010 baseball season to after the Giants were done celebrating their first world series in SF. I wanted to keep it going, but I came to realize that there were 100 blogs who already committed more than enough time to writing a plethora of information about the Giants. Who wants to do something that is already being done (and done extremely well) by so many other people?
So here I was faced with my dilemma: I love talking about sports and believe I have something worthwhile to say on multiple points, but I wanted to do something different and interesting. My fiancee' Caitlin said I should keep writing about sports about 2 weeks ago and I told her it was a lost cause since I felt I was bringing little value to any reader. Then it hit me: why not create a sports blog that does more than just inform readers about sports? Sports are great, but they don't provide fans with a number of things people tend to need, such as: money, intellectual prowess (depending on the circle), an understanding of international politics and the list goes on. In the last 3 months, I have officially become a stock owner and another member of the group of people who think they can make more money by predicting the unpredictable. I have been reading up on stock strategies, stock news and a number of other sources that I assumed would make me a better investor. My idea: a merger of two topics which have little in common on the surface, but that require a basic understanding of algebra and have some similarities deep down. The Sports Exchange: Where the Market Meets the Stadium.
In my blog I will do my best to analyze sports and the market, neither of which I do for a living, but have a keen interest in. It will be a learning experience for all as every post I research and write will further develop my knowledge of the market, creating new strategies along the way. So, we begin our journey together via the internet (thank you Al Gore), as I give you my opinion on sports and the market like no one has done before...because who else would think to mix money and sports.
So here I was faced with my dilemma: I love talking about sports and believe I have something worthwhile to say on multiple points, but I wanted to do something different and interesting. My fiancee' Caitlin said I should keep writing about sports about 2 weeks ago and I told her it was a lost cause since I felt I was bringing little value to any reader. Then it hit me: why not create a sports blog that does more than just inform readers about sports? Sports are great, but they don't provide fans with a number of things people tend to need, such as: money, intellectual prowess (depending on the circle), an understanding of international politics and the list goes on. In the last 3 months, I have officially become a stock owner and another member of the group of people who think they can make more money by predicting the unpredictable. I have been reading up on stock strategies, stock news and a number of other sources that I assumed would make me a better investor. My idea: a merger of two topics which have little in common on the surface, but that require a basic understanding of algebra and have some similarities deep down. The Sports Exchange: Where the Market Meets the Stadium.
In my blog I will do my best to analyze sports and the market, neither of which I do for a living, but have a keen interest in. It will be a learning experience for all as every post I research and write will further develop my knowledge of the market, creating new strategies along the way. So, we begin our journey together via the internet (thank you Al Gore), as I give you my opinion on sports and the market like no one has done before...because who else would think to mix money and sports.
Subscribe to:
Posts (Atom)






