ValueClick (NASDAQ: VCLK) is a leading online interactive marketing agency and solution provider. Their business offering is diverse and provide an array of ways for advertisers, marketers, and other agencies to take a marketing message online. Whether you are looking to buy banner impressions on major web sites or hire an online direct sales force (among other things), VCLK is a place to look.
VCLK took a 20% hit on Monday after announcing its earnings. The company missed expectations and reported slightly lower earnings and revenue guidance (though they are still expecting double digit growth in both EPS and revenue for the next year). VCLK is also off over 40% from its 52 week high it reached a few weeks ago, primarily on buy-out speculation when the other interactive agencies (DCLK, AQNT, etc.) were being scooped up.
VCLK pulled a surprise move by announcing earnings a week ahead of their originally planned date and really shocked many by announcing the change of earnings date on a Friday afternoon after the market close. Furthermore, they did not give anyone time to breathe by announcing them the following morning before market opened.
First, a brief comment on the timing of the earnings announcement and the date change. In all likelihood, it makes me wonder if VCLK has another announcement of some form that will take the place of the original earnings date announcement. That is simply food for thought.
A buy-out of VCLK is certainly still a strong possibility, though I do not think we will see the same premium given to its peers. Realistically, I am unsure exactly who is left to buy VCLK, though the person that buys you is never who you think it is going to be. VCLK being acquired is certainly a possibility, though I would not bet on exactly when or for how much. In short, what I mean is that if you like the company, then this is a great time to buy. If you are looking for a buy-out, well, it’s a gamble to say the least because as much as it makes sense, typically, the last person to leave dinner gets stuck with the check.
There is a great deal to like about VCLK, especially when it comes to controlling avenues of Internet marketing distribution. I have had the experience of directly working with all of the leading Internet agencies, and in terms of being an advertiser looking to acquire more customers via the web, I am most impressed with VCLK’s Commission Junction (CJ) offering. Simply put, as an advertiser, you sign up for the service, pay a set-up fee, set a commission you are willing to offer other web sites to sell your product/service, and CJ pushes it out to its very well built out affiliate marketing network of webmasters and web site business owners. For a small business, particularly an e-commerce retailer or B2C service provider, there is not a more cost-effective, easy to launch program that yields actual results. CJ gets paid a transaction fee each time the advertiser sells something via the network – and since the advertiser only pays for real results (e.g., an actual sale, not a click), it is a win-win and easy to measure return on investment. CJ adds a handful of merchants every day (paying $2,500+ to sign up) and continually adds to its transactional revenue volume. The more sales that are handled through CJ’s affiliate marketing network, the more money for VCLK.
What is noteworthy is that one of CJ’s biggest competitors, LinkShare, was acquired for $425M in October 2005 by a Japanese company.
In conclusion, VCLK is a good buy at these levels for the long-term, especially with what I believe is their market-leading CJ program for advertisers. There is Value in VCLK and seeing it recover to the $25-$28 mark over the next 6-12 months is within reach. An acquisition is less likely than the VCLK business model churning out cash.
Tuesday, July 31, 2007
Saturday, July 21, 2007
Sometimes, It Is Just Too Obvious – Ash Grove Cement (ASHG) and Seaboard Corp. (SEB)
Ash Grove Cement – Cement Demand In Nevada
Yes, I know I just wrote about ASHG the other day. It was more of a technical discussion, short-term article, but I did make reference to believing in the strong fundamental position of Ash Grove Cement. Furthermore, I said to go read my other stuff if you wanted more of the basics rather than some rhetoric about bids and asks. Perhaps I had it coming, but I am going to touch on some of those fundamentals right now.
Sometimes, a winner is just looking you right in the face and it is just painfully obvious what is going on. I am not talking about finding the stock that is going to double in two days – sure, that would be nice, but not a good investment approach. I am talking about the obviousness of the long-term success and merits of a company’s business model.
ASHG has made it well publicized that they are building a monster cement plant in Southern Nevada. By chance, I happen to be in Las Vegas while I am writing this article. I was actually hoping to have the chance to visit the site of the plant, which is only a handful of months away from going online. Currently, it is being built. I called ASHG and wanted to ask if I could visit the site just to check it out. My call went unreturned, but likely for the best – I mean, I had plenty to do while I was here.
While I was here, I was looking at the view from a house in Henderson, NV – the town right next store to Las Vegas. The view of the mountains was fantastic, but paled in comparison to the view of the strip from the elevated, unobstructed by anything patio. What do I see? I see a 6 mile gap between the South Point Hotel and the Mandalay Bay, which is the first/last hotel on the strip for those not familiar with the landscape of Las Vegas.
From discussions with the locals and other information about the real estate in the area, I quickly learned that plans are well in motion to continue to build the strip out. Basically, in several years, that 6 mile gap will be filled and South Point will be the first/last hotel on the strip. The gap will be filled with huge resorts and residential sky rises. The resorts that are slated to be built are momentously huge – and there is an outside chance (though very small) that the tallest building in the world will be built in the vicinity. My point is, the growth in this area is not done – and with new casinos, many being backed by the large, established organizations, we are looking at many new jobs to support the new resorts. My thought – it is going to take lots, lots, and lots of cement.
It is abundantly clear that the demand for the cement in this area is going to be huge and the $200 million ASHG is spending on building the place is no small change, especially for a family owned/operated company that happens to have a handful of shares floating around. Sure, we know we need more cement and concrete – that is no secret. However, the sheer magnitude it is going to take to build these monster buildings in the strip’s gap is almost overwhelming. I do not have any specific numbers on what it is going to take to build these new resorts and the surrounding areas – nor do I know how much cement will be needed. All I know is that ASHG will be more than well positioned to take advantage of the impending boom and return on investment is likely sooner than anyone is giving them credit for.
In summary, sometimes choosing what company to invest in for the long-term is painfully obvious in terms of the success that will be enjoyed by the business model. It does not take an economic scholar nor expert fund manager to easily see what is happening here in Las Vegas and what is to come. Short and simple – 6 miles of empty space, plans for new casinos and resorts, lots and lots of concrete – buy ASHG.
Seaboard Corporation – Aren’t They a Dry Bulk Shipper?
This is more of an alert rather than rhetoric, so it will be brief. In the past few trading days, SEB has declined under $2,200/share. The bigger news is that during this time, marine transport and dry bulk-shippers were going through the roof. SEB did not take part in the rally. Why? Perhaps since SEB is diversified with a multitude of cash producing businesses, I guess they are not a bulk shipper. Who knew, right?
SEB continues to see growth in their marine shipping business, is buying new ships (a big chunk of capital expenditures slates for 2007 and see June 14, 2007 announcement on www.seaboardmarine.com), and is one of the largest operators (perhaps the biggest?) in the Caribbean. I still like how SEB retains the huge majority of their free cash flow to reinvest in the business, rather than paying out huge dividends like some of these other shippers.
Short and simple – they are a bulk shipper, they are huge, they are expanding their fleet, they are keeping most of their money (helping to reduce taxes and allow for growth). I think that the high dividend payouts of many of the other bulk shippers will be their downfall over the long-term. Not investing more in their respective fleets and not saving cash for a rainy day could be troublesome, especially with how leveraged some of these shippers are. SEB, fortunately, is not highly leveraged. Well, I digressed a little bit – best of luck to the other bulk shippers. Of course, I wish I bought a handful of them a year ago when I started researching the shipping industry, but you cannot win them all.
SEB is not nearly as obvious as ASHG’s position in Nevada, but when a strong company shows weakness when the rest of the sector is showing strength, especially during the short term, one should take notice, particularly if there have been no material changes in the company’s financial status. I am not going to say buy more here – I will leave that up to you and timing the market. SEB can certainly drop further than it has in the past couple of weeks. Regardless, I think the future of SEB – and subsequently their stock price is obvious. And it really does not take a genius to see it – it is merely simple business principles. What am I doing with SEB, you ask? Well, that should be obvious, too.
Yes, I know I just wrote about ASHG the other day. It was more of a technical discussion, short-term article, but I did make reference to believing in the strong fundamental position of Ash Grove Cement. Furthermore, I said to go read my other stuff if you wanted more of the basics rather than some rhetoric about bids and asks. Perhaps I had it coming, but I am going to touch on some of those fundamentals right now.
Sometimes, a winner is just looking you right in the face and it is just painfully obvious what is going on. I am not talking about finding the stock that is going to double in two days – sure, that would be nice, but not a good investment approach. I am talking about the obviousness of the long-term success and merits of a company’s business model.
ASHG has made it well publicized that they are building a monster cement plant in Southern Nevada. By chance, I happen to be in Las Vegas while I am writing this article. I was actually hoping to have the chance to visit the site of the plant, which is only a handful of months away from going online. Currently, it is being built. I called ASHG and wanted to ask if I could visit the site just to check it out. My call went unreturned, but likely for the best – I mean, I had plenty to do while I was here.
While I was here, I was looking at the view from a house in Henderson, NV – the town right next store to Las Vegas. The view of the mountains was fantastic, but paled in comparison to the view of the strip from the elevated, unobstructed by anything patio. What do I see? I see a 6 mile gap between the South Point Hotel and the Mandalay Bay, which is the first/last hotel on the strip for those not familiar with the landscape of Las Vegas.
From discussions with the locals and other information about the real estate in the area, I quickly learned that plans are well in motion to continue to build the strip out. Basically, in several years, that 6 mile gap will be filled and South Point will be the first/last hotel on the strip. The gap will be filled with huge resorts and residential sky rises. The resorts that are slated to be built are momentously huge – and there is an outside chance (though very small) that the tallest building in the world will be built in the vicinity. My point is, the growth in this area is not done – and with new casinos, many being backed by the large, established organizations, we are looking at many new jobs to support the new resorts. My thought – it is going to take lots, lots, and lots of cement.
It is abundantly clear that the demand for the cement in this area is going to be huge and the $200 million ASHG is spending on building the place is no small change, especially for a family owned/operated company that happens to have a handful of shares floating around. Sure, we know we need more cement and concrete – that is no secret. However, the sheer magnitude it is going to take to build these monster buildings in the strip’s gap is almost overwhelming. I do not have any specific numbers on what it is going to take to build these new resorts and the surrounding areas – nor do I know how much cement will be needed. All I know is that ASHG will be more than well positioned to take advantage of the impending boom and return on investment is likely sooner than anyone is giving them credit for.
In summary, sometimes choosing what company to invest in for the long-term is painfully obvious in terms of the success that will be enjoyed by the business model. It does not take an economic scholar nor expert fund manager to easily see what is happening here in Las Vegas and what is to come. Short and simple – 6 miles of empty space, plans for new casinos and resorts, lots and lots of concrete – buy ASHG.
Seaboard Corporation – Aren’t They a Dry Bulk Shipper?
This is more of an alert rather than rhetoric, so it will be brief. In the past few trading days, SEB has declined under $2,200/share. The bigger news is that during this time, marine transport and dry bulk-shippers were going through the roof. SEB did not take part in the rally. Why? Perhaps since SEB is diversified with a multitude of cash producing businesses, I guess they are not a bulk shipper. Who knew, right?
SEB continues to see growth in their marine shipping business, is buying new ships (a big chunk of capital expenditures slates for 2007 and see June 14, 2007 announcement on www.seaboardmarine.com), and is one of the largest operators (perhaps the biggest?) in the Caribbean. I still like how SEB retains the huge majority of their free cash flow to reinvest in the business, rather than paying out huge dividends like some of these other shippers.
Short and simple – they are a bulk shipper, they are huge, they are expanding their fleet, they are keeping most of their money (helping to reduce taxes and allow for growth). I think that the high dividend payouts of many of the other bulk shippers will be their downfall over the long-term. Not investing more in their respective fleets and not saving cash for a rainy day could be troublesome, especially with how leveraged some of these shippers are. SEB, fortunately, is not highly leveraged. Well, I digressed a little bit – best of luck to the other bulk shippers. Of course, I wish I bought a handful of them a year ago when I started researching the shipping industry, but you cannot win them all.
SEB is not nearly as obvious as ASHG’s position in Nevada, but when a strong company shows weakness when the rest of the sector is showing strength, especially during the short term, one should take notice, particularly if there have been no material changes in the company’s financial status. I am not going to say buy more here – I will leave that up to you and timing the market. SEB can certainly drop further than it has in the past couple of weeks. Regardless, I think the future of SEB – and subsequently their stock price is obvious. And it really does not take a genius to see it – it is merely simple business principles. What am I doing with SEB, you ask? Well, that should be obvious, too.
Mr. Herb Greenberg – Thank You….and You Are Welcome
Reading the Wall Street Journal the other day, I noticed an article written by reputable author, Herb Greenberg. I hate to say it, but it appears Mr. Greenberg took a page from my book mentioning Seaboard Corp (AMEX: SEB), Ash Grove Cement (Pink Sheets: ASHG), and J.G. Boswell (Pink Sheets: BWEL) all in the same breath. I said – wow. Of course, imitation is the highest form of flattery, but I must say it is great to be on the same page with a writer like him.
The article, “Strong, Silent Types: Some Companies Let Their Fundamentals Do the Talking” talks about how a handful of companies do not participate in the gala that is investor conference calls or earnings guidance. As my previous blog on the exclusivity of ownership discusses, I 100% agree with this stance.
There is not much to be said here, except that it was nice to be in the same light with this guy.
And, of course, to play devil’s advocate, there was a quote in the article that hit it right on – basically saying that if you are any good at something, there is no need to brag or draw attention to yourself. Things will take care of themselves. I know some will say that I am bragging and drawing attention to myself by writing rather than keeping my mouth shut, but I am just writing. If someone reads it, great….if not, well, so be it. I probably should keep my investment merits and failures to myself – the best fund managers do just that – but I am not that good at the investing or writing aspect yet, so I have to brag. :-)
The article, “Strong, Silent Types: Some Companies Let Their Fundamentals Do the Talking” talks about how a handful of companies do not participate in the gala that is investor conference calls or earnings guidance. As my previous blog on the exclusivity of ownership discusses, I 100% agree with this stance.
There is not much to be said here, except that it was nice to be in the same light with this guy.
And, of course, to play devil’s advocate, there was a quote in the article that hit it right on – basically saying that if you are any good at something, there is no need to brag or draw attention to yourself. Things will take care of themselves. I know some will say that I am bragging and drawing attention to myself by writing rather than keeping my mouth shut, but I am just writing. If someone reads it, great….if not, well, so be it. I probably should keep my investment merits and failures to myself – the best fund managers do just that – but I am not that good at the investing or writing aspect yet, so I have to brag. :-)
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