First reader up this week writes:
“Dear Steve, I understand that ATHM is paying 1.04 shares for each XCIT share when the deal is completed. I’m trying to take advantage on the existing spread in the market by shorting the ATHM and buying the XCIT, but the spread keeps going wider. Is there any reason behind this movement that you’re aware of?”
Reply: Under the agreement, @Home Network will issue 1.041902 shares of ATHM common stock for each share of Excite (NASDAQ:XCIT). Keep in mind that this deal was announced in January before ATHM had a 2-for-1 stock split in March. Deals like this usually take 3 months from announcing to close. So any day perhaps.
“Know anything about a company called Concepts Direct? CDIR?”
Reply: Yet another catalog company with Internet plans (YACCWIP!). One of the catalogs is called Snoopy, etc. Need I say more?
And Now Mickey Mouse
“Steve: With all the Disney/ABC content, isn’t SEEK’s GO site uniquely positioned among the portals? I mean, when audio and video starts streaming, GO’s content will be unrivaled…But this potential doesn’t seem to be reflected in SEEK’s stock price. What
am I missing here? Love your reports.”
Reply: I think SEEK ought to be valued on par with XCIT, that Disney’s depth hasn’t been recognized nor implemented fully here. Once again, we’re seeing how value goes unrecognized despite it being right before Wall Street’s eyes. GO.com looks like it has the Disney content machine behind it. But unrivalled? Depends. I believe Disney has depth and breadth but so do Time Warner, News Corp. and Viacom. Disney has a better brand no doubt about that.
“I am a 64 yr. old senior (f) who would like to buy Internet stocks but cannot afford to take a chance on choosing a few stocks, so I would like to go into an Internet fund. Could someone tell me how to go about finding and perhaps choosing this type of fund?”
Reply: There are a few funds that have done well so far with much play being given to The Internet Fund and Munder Net Net. Having beaten these funds the past two years and so far this year with my stock picks you may keep an eye out for a fund from me perhaps. If you’re in a hurry look these two over.
“After you raised a question about ZD, I bailed out with a small profit. As you know the rest is history.
I have some more money to put in the market next week and wanted your opinion on the following moves. I want these moves to be very aggressive but sensible. I am interested is 90 day or less positions.
1. I was ready to jump in EGRP before the run-up last week. Now I wonder if NITE may be a better bet. What are your thoughts?
2. Is it MindSpring’s (MSPG) turn to take a run? Their upcoming 3-1 split and earnings announcement are interesting to me. Thoughts?
3. I am torn between Ebay and Amazon. I know Ebay is getting more competition but listings are everything in their business and no one touches their volume and loyal auction customers. I expect their profits will be above expectations too. On the other hand, Amazon seems to be the favorite of most analysts. If you were buying for the 60 – 90 day timeframe, which stock would you pick?
4. Finally, is it time to dump my positions in SFE and EXDS? The run-up has been terrific and I hate to be greedy. However, but I bailed out of CMGI, CNET, and GNET too early.”
Reply: I don’t give individual advice per se but let me share some opinions on the landscape: E*TRADE (NASDAQ:EGRP) represents more of a pure play to me; Mindspring (NASDAQ:MSPG) has popped on the split while Earthlink (NASDAQ:ELNK) seems a bit behind the valuation curve; eBay (NASDAQ:EBAY) to me has a better business model today than Amazon.com (NASDAQ:AMZN), although Amazon has a better known brand. Why is eBay’s model better? it’s a referral service that doesn’t have to worry about shipping, handling, warehousing, and it has deals with AOL. EBAY’s margin is better by far because of that although I expect Amazon to move into that model also.