As investment banking is now dead and sell side research is even more useless than it ever was, people are stumped over how and where to get their investing ideas. There is only so much drivel you can hear on
CNBC and
FoxNews before losing your mind, and you are close to firing that "analyst" you hired a few months ago to come up with the new lead-to-gold idea, but who has already lost you and your fund a ton of money by pounding the table that
AAPL will come back dammit. So what is a fund manager/retail investor/trust fund baby with an E*trade platform to do? Here we list some suggestions.
Anyone who has ever used a retail brokerage platform and traded a stock or two on their own has likely found himself at Yahoo! Message Boards. The place that angry shorts (in recent months not so angry), angry longs, and everyone in between can use as a venting conduit, but is too busy or lazy to set up a blog, has inevitably posted under a fake alias touting some "secret" about a stock that would suit one's agenda. The problem with Yahoo and other message boards is that while everyone is writing, nobody is reading, so the likelihood that whatever you type will actually be read is minimal. Sometimes you will find amusing anecdotes about Yahoo! boards, most notably the bored posting of company big wigs trying to pump up their stock. A phenomenal example of this is Whole Foods CEO John Mackey who for years posted under the pseudonym "rahodeb", an anagram of his wife's name Deborah (feel free to google his posts at your leisure). And while occasionally you may find a random gem by some disgruntled low-level employee, the probability of actually getting useful information as these types of medium is slim to none.
Next up on the value chain are semi-paid investment forums, newsletters and the thousands of financial blogs that have cropped up all over the
blogosphere (we say this without any sense of self-referential sarcasm). Too many to list here, an occasional google search will reveal many, each with their own unique niche. Some good examples are
value-investing-forum.com and
http://www.valueforum.com/, but of which will not make you rich but have a solid following and you may find some angle on an investment that you were not aware of before.
So who is at the top? Many people will definitely point to
http://www.valueinvestorsclub.com/, a rather secretive site that gets very few hits by the occasional web surfer, yet has made many people very, very rich.
Just what is VIC? The website is a portal, created in 1999 by Gotham Capital managers Joel Greenblatt and John Petry, which has a maximum membership quota of 250 people. The site is free, and anybody can register to see old recommendations (90 day lag), however to have access to real time ideas as they are presented you need to be invited. This happens by submitting an investment idea, which the Gotham guys go over, and if they like it, you get a thumbs up. Upon admission you simply need to provide between 2 and 6 ideas a year, which your peers need to value as better than average, to maintain your membership. Every idea presented within VIC gets a peer review and is rated on a scale of 0 to 10, to allow other investors to bypass the chaff. At latest count there were over 10,000 unique investment recommendations. And as the membership consists of 50% professional investors who actually have capital invested their recommendation, and 50% amateurs, the quality of the content is miles ahead of anything else on the internet. As new members are accepted, the worst pickers get ejected, sometimes to the tune of 20% of all members a year. In this way the site works exactly like Goldman Sachs with a very Darwinian model in which only the best and/or most prolific survive. Initially the forum's focus was on equities, although lately a significant amount of recommendations include bonds and loans.
As all members use pseudonyms and there is no way to message one-another, there is no risk that an entrepreneurial member can solicit others and form a mega hedgefund filled with the best analysts out there. Only Greenblatt and Petry know the identities of each member and what company they come from.
Greenblatt and Petry have a reasonable argument for the centralization of information: they "built and manage the community for free, and want to retain the intellectual capital in the community."
So if you think you have what it takes, go forth and submit your idea... If it is good enough you just may get access to the mecca of investing, where hedge funds go to push their books, and just the appearance of a long or short recommendation is rumored to have been able to move the stock up to 10%, or at least it did in the heyday of hedgefunding.
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Dubai's Istithmar investing company, which purchased the Company for $942 million in 2007, says it is sick of this whole aspirational consumer bullshit and wants a refund... Seeing how all things Dubai are crumbling right now, one can imagine this is more of a firesale than a controlled exit. David Jackson, CEO of the naive Dubai company has said he will not sell Barney's for less than the amount it paid for it (if you are lucky to get half, the bank that does the deal is worth every dollar of its 1.5% M&A fee). Istithmar had suspended its vice chairman (or chairman of vice) and CFO in September after he was detained for alleged embezzlement.
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