Message 8445118
SmartMoney.com: You've got a lot of new money this year. What are your big pickups?
Jacob: There are only a few noteworthy additions. One would be eBay (EBAY). Another name we've picked up is TMP Worldwide (TMPW). We also introduced this year a new subsector within the fund, what I would call IP networks of the next century. These companies include Global Crossing (GBLX), Qwest Communications (QWST) and a couple of other smaller ones.
Basically, we're in an environment right now where, unfortunately, people define an Internet company in terms of how much it has appreciated in value. If the company's stock has been flat, it's clearly not an Internet company. But if it's up five times, of course it's an Internet company. That's not really the correct way to look at the situation.
A lot of the companies we own have appreciated considerably. We look for better areas that we think provide good values, but haven't had as much of a price runup. This [IP networks] was an area we'd been looking at, and we felt it had the opportunity this year to really come into its own. These are the networks of the next century, where we'll see convergence of voice and data transmission, and these companies are in the forefront and really offer the most advanced and lowest cost solution out there today.
[Note: For the nontechnofiles, IP stands for Internet protocol, which is a format computers use to link to each other over the Internet. But IP technology can also transmit other forms of communications, such as telephone calls.]
SmartMoney.com: What do you like about Global Crossing?
Jacob: Global Crossing is laying fiber throughout the world, connecting continents -- they have whole swaths of coverage. The interesting thing about the Internet now, which will probably continue for the next few years, is that although Internet usage outside the U.S. is in its nascent stages, it's growing at a much quicker rate than here in the U.S. On the flip side, a majority of the content still resides here in the U.S., so the real bottleneck that we're starting to see today and probably will see over the next few years will be from foreign countries accessing content that resides here in the United States.
So this is probably one of the biggest bottlenecks that we're starting to see now, and will become more evident over the next few years. [Global Crossing] is a very attractive asset, and one of the few companies that is positioned to benefit from this trend
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I've been following the institution sponsorship of GBLX, it stood at the 10-11% a few weeks ago vs a 30+% for QWST.
That number is now 22% as I checked today, still under owned relative to its peers in the sector. The price and volume action in GBLX the past month has been consistent with accumulation.
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