Conversant just got a takeover. Kerching another fat profit.
I wrote about the stock in June on Forbes:
After Opentable got bought, this is “2 out of two” takeovers of my US internet selections. I’ve only held two US internet companies in the current Dotcom boom II and both have been snapped up.
Happy days.
I tend to stick with UK stocks because that’s where my deep skills are, but I’ve been branching out more into the US market because the dollar is going up and as a non-dollar denominated entity, it makes sense for me to shift some risk stateside for some natural currency hedge.
If you follow my writing in Forbes you will note I tend towards calling bubbles and their danger in a way that doesn’t suggest internet stock fandom.
You’d be right as I’m a value investor.
You don’t have to search out low p/e and dividends to be a value investor though, because value is relative. When a market is expensive and going up, slightly expensive becomes cheap.
As such I will go for relative value and I’ve been doing that with my solitary internet picks.
The nice thing about the US market is it is bi-polar by nature. A stock can go from zero to hero and back again and the process can repeat several times over.
That is an opportunity. Buy a zero, get a hero.
Some tech stocks like Facebook, Linkedin and Tesla have mad valuations. However, they are what they are and there is no point in fighting it. Instead there is an opportunity to invest in cheap versions of internet glory stocks and wait for them to get an invite to the party.
Conversant and Opentable are/were both B list internet stars. They were proper companies with solid businesses with firm footprints. In a way the fact they are established took a bit of the shine of blue sky off them.
However my belief is that if something is relatively cheap in terms of other businesses that outside the fanfare of narrative are basically fruit off the same tree, either the expensive companies will fall or the cheap companies will rise, or both.
I don’t have to short a bubble of an expensive company, never fight bubbles which are growing, zombie hordes of investors will eat you every time. I much prefer to be long of a cheap version, which has its downside covered but its upside open to the elements.
This is why I tipped OTC markets. I don’t have to call down the CME for being too expensive, I can buy some OTC Market and hold some Nasdaq (NYSE:NDAQ) on the basis its looks cheap in particular, cheap in general and cheap relative to other exchanges.
So now I will be stuck with cash on Monday when I sell Conversant at the offerer. I’m already heavily into cash in general leading up to the end of QE and need another cheap internet play to switch into.
So I’m tempted by Expedia, it’s a great company, I spend a ton with it with never a glitch. It is 3 times sales and with a great brand that makes it relatively cheap for an internet stock but it is not bite sized at a market cap of $11 billion.
Then there is Bankrate. It is a tasty prospect and smallish at $1.5bn in market cap and three times sales. It’s a bit new though to be up for grabs.
So I’m going to plump for Orbitz which is just above 1 times sales and a sub billion market cap. It’s a scrappy company but one that looks like it is being undergoing a transformation. Its got a solid enough brand, most people have heard of it.
I don’t need it to go to ten times sales, three will do, so on Monday (15/9/14) I will sell my Conversant, drink a bottle of 1963 St Louis in salute and buy a lump of Orbitz and hope the end of QE is not the end of dotcom boom II.