Take a look at our portfolio and we have holdings in most major categories; capital goods (CX), technology (EMC), conglomerates (GE), financial (BAC) and health care (HNT). We've done a good job spreading out our investments and it makes sense to continue such a practice, at least until our lineup is large enough to support sector duplication.
As much as I would love to motion for an energy stock, the heavy hitters are out of our price range. I opted to look in the services sector, or industries that sell a good that you can't physically wrap your hands around. My choice is a brand with a presence in over 30 countries, is used by millions of Americans each and every day and is a powerhouse in online advertising- Yahoo! Inc (YHOO).
For better or worse, when the economic climate is challenging, businesses cut their ad budget to conserve operating costs. Yahoo! has tremendous penetration and has managed to generate substantial income despite the current financial climate. As I'll explain live, an online ad campaign is simple to roll out and is far more cost effective than television, radio or outdoor. An advantage to strong service companies is their cost to do business- Yahoo! has its infrastructure in place and doesn't have the cost of warehousing inventory or coordinating shipping. A statistic closer to home- Yahoo! Sports has more daily viewers than ESPN.com. As long as Yahoo! keeps putting food in the spoon, anxious web browsers are standing by with their mouths open.
The biggest upside to Yahoo! is it's buyout potential. In search engines, there is Google and there's everyone else. Yahoo! is affordable enough for another search or software company to scoop up and pool assets to carve out market share with Google. Such an occurrence would be great for shareholders, but certainly isn't my primary reason for selecting the company.
I look forward to hearing your picks and feedback.
2 comments:
So Microsoft saw what we saw and made a major agreement with Yahoo! today. The announcement explained that Microsoft's new binky "Bing.com" will appear when you search via Yahoo.com. In exchange, Microsoft will give Yahoo! over 80% of ad revenue generated on the site. This merger positions the duo as the clear #2 in online advertising and will surely attract international and national client campaigns- and more revenue. Check please!
Hey I think we'd have a hard time breaking away from the crowd for at least an hour this weekend. If anything, it may make sense to reconvene mid-day on Sunday, depending on our condition and the commute back to the Bean. What do you guys think about grabbing lunch on Sunday either in NH or on the way back from the lodge?
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