Saturday, September 28, 2013

Groupon and Zynga

I do already have Groupon (GRPN) on my Internet stock list, but I had drawn the line of Zynga (ZNGA). Meanwhile, Zynga has been doing fair well in the market, so I've been having second thoughts.
 
My thesis is that that although I am not terribly excited personally about either of these companies and I don't use either of their products or services, I do have to admit that they both have been very successful at capturing mindshare, which is a very valuable commodity.
 
Both have suffered the same fates of being overhyped, flying way too high in the early days, struggling with various issues, not the least of which is profits, coming crashing down to earth, but then bouncing back. Not as strong a bounce back as Facebook has achieved, but they do have long lives ahead of them, I think.
 
I'm not going to bet that either company is a slam dunk in the near term, but I am willing to give each a chance.
 
I haven't yet opened any new positions for the stocks on my technology investment portfolio, other than maintaining my existing positions in Facebook and Priceline.
 
So, here is my updated Technology Investment Portfolio:
  • AAPL - Apple
  • AMZN - Amazon
  • GOOG - Google
  • NFLX - NetFlix
  • LNKD - LinkedIn
  • RAX - RackSpace
  • BIDU - Baidu
  • SINA - SINA
  • FB - Facebook
  • YELP - Yelp
  • GRPN - Groupon
  • P - Pandora Media
  • PCLN - Priceline.com
  • TSLA – Tesla Motors
  • Z - Zillow
  • MELI – Mercadolibre
  • ZNGA - Zynga
-- Jack Krupansky

Intel and Staples

Two growth-value plays I am considering are Staples (SPLS) and Intel (INTC). Both have a history and a variety of issues, but those issues may already be completely baked into their respective cakes. They do seem relatively cheap to me, and they both seem to have some amount of growth potential. And, as a big bonus, both pay dividends at a healthy rate, well above 3%.
 
I haven't made any decisions yet, but what I may do is take a small to modest position in each and then add to those positions on any 15% drops from any near-term highs.
 
In short, I'm not absolutely convinced that these stocks might move significantly lower, but they are starting to seem like they may be poised for significant upside as well. Especially as the current market highflyers, such as my Facebook (FB) and Priceline (PCLN) stocks seem a bit pricey at their new recent peaks.)

-- Jack Krupansky

Friday, September 27, 2013

PEAC - Attended Dow Jones Private Equity Analyst Conference for 2013

Yesterday and today I attended the 20th annual Dow Jones Private Equity Analyst Conference here in NYC at the Waldorf Astoria Hotel, just across the street from where I live.
 
Private equity is an umbrella category of investing that includes both leveraged buyouts and traditional venture capital. It also now includes a hybrid category called growth equity which is similar in some ways to late-stage venture capital investing, but requires that the company has already achieved a significant and reliable level of growth and profits, as well as sometimes having a senior status so that the growth equity investors get a better stake of the payouts if the company has a less than desirable exit. In other words, the growth equity guys wouldn't have as much upside and the pure venture capital investors on a big success, but also wouldn't have as big a loss on the downside.
 
Although the attendees have a variety of interests, the primary, bread and butter attendees are the so-called limited partners or LPs who invest their employer's money in private equity and venture capital funds, or so-called funds of funds which are funds who simply invests in private equity and venture capital funds. Advisers and service providers also attend, as well as the so-called general partners (GPs) or managing directories of the funds, as well as institutional investors in general.
 
Rather than being formal presentations, the typical session is a panel discussion by practitioners in the various niches of private equity. Sometimes the panelists are strictly fund managers, but sometimes they are high profile LPs as well.
 
A lot of the sessions were general sessions for everybody, held in the main Grand Ballroom of the Waldorf. Then there were a subset of he sessions that were breakout sessions in smaller "salons" of the Waldorf. Lunch was in the Grand Ballroom, and their Gala dinner was held in the Waldorf's famed Starlight Roof (no, they didn't open the ceiling for us!)
 
Being a Dow Jones event, the session moderators were editors, reporters, and writers for the various Dow Jones editorial properties, the main one being the Wall Street Journal.
 
I attended as "press", albeit a mere blogger. I ran into one guy who writes for the CNBC web site and writers for a variety of specialized, high-end investment publications.
 
Although private equity covers a wide range of investments, technology, life sciences and health care, energy, and consumer and business services are the main areas that get a lot of attention.
 
The three biggest topics of interest to typical attendees are fund raising, portfolio management, and exits.
 
Fund managers are interested in raising money to invest in startup companies, for venture capital, or larger, established companies for leveraged buyouts, or medium-sized or middle market (midmarket) companies for growth equity.
 
Portfolio management is concerned with managing companies after the initial investments have been made. The investors commonly sit on the board of directors for their investments. Nominally, they have a passive role, but all too commonly they need to step in to actively guide the company as it grows and evolves.
 
Ultimately, the real action is exits, when the fund managers are able to either sell their portfolio companies to larger companies, or, even better, to to take them public with an IPO. Ebay/PayPal's acquisition of Braintree today is a perfect example of such an exit by acquisition. The ratio of acquisitions and IPOs varies a lot, but a lot of times may be 50/50. Sometimes even successful ventures can be too small or niche to become full-blown public companies.
 
The flip side of fundraising for venture capital fund managers is the process of investing by limited partners. And when the funds have exits for portfolio companies, the LPs typically get stock distributions, depending on whether the exit is an IPO, a stock acquisition, or a cash acqusition.
 
The upcoming Twitter IPO was a topic that came up repeatedly. After Facebook's fiasco of an IPO but recent bounce back, opinions were all over the map as to what would happen with Twitter, but there did seem to be a fair amount of sentiment for the proposition that all the players learned lessons from the Facebook IPO, so that it would likely be a lot more orderly. That said, there wasn't a lot of strong positive sentiment for the performance of the stock after the IPO, and an electronic poll of the attendees show that a majority would not invest in the company. On the other hand, when I personally talked to individual venture fund managers at the conference, every one of them was very enthusiastic about the company's prospects.
 
The interest in private equity was global. I met people from China, Brazil, and Europe.
 
There was a lot of discussion about Obamacare and uncertainty as to how it would play out, especially when it comes to investment in life science and health care companies.
 
Ditto for the ongoing saga of the federal budget and debt limit talks. The Washington Bureau Chief for the WSJ gave us a lot of insight into how things would or might play out.
 
Besides the panel discussions, there were interviews of some of the top players in the industry, from the likes of Blackstone, Carlyle Group, Bain Capital, Warburg Pincus, Neuberger Berman, etc. Although the top players tended to be more from the buyout portion of private equity, with none of the large tech-oriented venture funds represented.
 
Besides the great panel discussions and interviews, the real excitement is the networking with attendees. There really isn't any other place where you can dig in and have such in-depth conversations on high-end investing as with this conference.
 
There are also sponsors that exhibit their services and participate in some of the panels, including KPMG, Alix Partners, ESG Analytics, etc.

-- Jack Krupansky

Monday, September 16, 2013

Proposed technology investment portfolio

[Oops... update: I forgot one: TSLA – Tesla Motors]
 
I haven't made any final decisions yet, but here is a proposed technology investment portfolio that I am considering:
  • AAPL - Apple
  • AMZN - Amazon
  • GOOG - Google
  • NFLX - NetFlix
  • LNKD - LinkedIn
  • RAX - RackSpace
  • BIDU - Baidu
  • SINA - SINA
  • FB - Facebook
  • YELP - Yelp
  • GRPN - Groupon
  • P - Pandora Media
  • PCLN - Priceline.com
  • TSLA – Tesla Motors
  • Z - Zillow
  • MELI - Mercadolibre
My intention is to start up an automatic periodic investment plan on ShareBuilder, maybe biweekly or monthly. Start from zero and grow the portfolio incrementally, with equal dollar investments for each position.
 
This is not a trading portfolio. This is a long-term investment plan.
 
One of the key benefits of the incremental automatic investment plan is that it takes emotion out of the equation. A second key benefit is that it assures that you take advantage of the inevitable dips and crises.
 
Twitter will be added to this portfolio as soon as it goes public.
 
Ditto for Lending Club.
 
And any other "interesting" companies that go public as well.

-- Jack Krupansky

Sunday, September 15, 2013

Proposed investment portfolio

I haven't made any final decisions yet, but here is a proposed investment portfolio that I am considering:
  • AAPL - Apple
  • AMZN - Amazon
  • GOOG - Google
  • NFLX - NetFlix
  • LNKD - LinkedIn
  • RAX - RackSpace
  • BIDU - Baidu
  • SINA - SINA
  • FB - Facebook
  • YELP - Yelp
  • GRPN - Groupon
  • P - Pandora Media
  • PCLN - Priceline.com
  • Z - Zillow
  • MELI - Mercadolibre
My intention is to start up an automatic periodic investment plan on ShareBuilder, maybe biweekly or monthly. Start from zero and grow the portfolio incrementally, with equal dollar investments for each position.
 
This is not a trading portfolio. This is a long-term investment plan.
 
One of the key benefits of the incremental automatic investment plan is that it takes emotion out of the equation. A second key benefit is that it assures that you take advantage of the inevitable dips and crises.
 
Twitter will be added to this portfolio as soon as it goes public.
 
Ditto for Lending Club.
 
And any other "interesting" companies that go public as well.

-- Jack Krupansky

Thursday, September 12, 2013

Twitter game plan

Okay, Twitter is finally going public!
 
Here's my investment plan for Twitter:
 
1. Buy a small amount at the open, at the market price. Guaranteed not to be a great deal, but it gets me in the game - and makes me look like a genius if it rises rapidly.
2. Late in the day, if it is more than 5% off its peak of the day, buy another small amount.
3. Over time, buy another small amount at every 5% dip from its most recent high.
 
This is all as a long-term investment. No trading. No selling.
 
Two years from now you will be free to criticize me if I end up looking like an idiot over a two-year horizon.
 
Over the weekend I started putting together a list of stocks to start buying for the long term, but I haven't started buying yet. Maybe next month. One is Pandora Media – up  12% today.

-- Jack Krupansky