Internet Capital Group: Ground Zero for B2B
Friday March 10, 9:00 am Eastern Time
Individual Investor
Senior Analyst: Garrett Bekker (3/10/00)
Internet Capital Group (NASDAQ: ICGE - news)is one of the best ways to play the explosion of interest in B2B e-commerce.
Like the other Internet incubators that have successfully brought a series of Internet stocks to the public markets - CMGI (NASDAQ: CMGI - news) and Safeguard Scientifics (NYSE: SFE - news) - Internet Capital Group is putting together a stable of Internet companies. But ICG's value is its focus on business-to-business or ``B2B' e-commerce.
The advantage of this approach is that buying ICG is like buying a diversified investment portfolio of B2B e-commerce plays, which any investor who hasn't been asleep for the past year can tell you is perhaps the hottest area of the Internet these days.
But during late February, the stock declined more than 50% from its recent all-time high of $212 to a low of $96.94. Since then it has rebounded roughly 45%, gaining $1.31 on Wednesday to close at $139.44.
The stock got a big boost on Monday when analyst Eric Upin of Robertson Stephens cited ICG as one of his best investment ideas. The shares promptly rose $23.19, or 19.5%.
We think ICG has room for more upside.
ICG's current holdings total 56 separate B2B-focused partners, broken down into two categories: Infrastructure Service Providers and Market Makers. The latter consist of some of the hottest segments of the ``New Economy,' including outsourced application hosting, e-commerce consulting, systems integration, digital market places and e-mail messaging services.
Most of the company's holdings are private companies, but a handful are already traded publicly and several others have filed for initial public offerings.
Each of its 20 partner companies in the infrastructure service providers category offer goods and services that are a vital piece of the overall B2B e-commerce experience, including consulting and technical services for Internet marketing [US Interactive (NASDAQ: USIT - news)], B2B marketplace software platforms (Tradex), application hosting [Breakaway Solutions (NASDAQ: BWAY - news) and Jamcracker], transactions and payment processing, credit card authorization and fraud tracking (ClearCommerce), encryption software for secure transactions (Entegrity Solutions), real-time traffic monitoring (traffic.com) and logistics (logistics.com); Residential Delivery Services) and supply chain collaboration software (Syncra Systems).
In the market makers group, ICG currently has 36 separate properties, with eight horizontal market makers and 28 vertical market makers. Horizontal market makers provide a single product or service across multiple industry verticals, while vertical market makers concentrate on providing a number of services within a single industry.........<continued--->
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