GO2NET THREAD STARTER INITIATES INSP COVERAGE WITH A "BUY"
White Shoes, the Silicon Investor member who started a thread for Go2Net (NASDAQ: GNET) shortly before Go2Net acquired Silicon Investor, has initiated coverage of Infospace (INSP) with a "buy" rating.
Go2Net and Infospace merged in 2000; as business conditions and market sentiment unraveled, Infospace shares sunk steadily into the single digits. But some analysts, including White Shoes of Bilkway Securities, feel there are good times ahead.
"I don't know a lot about what Infospace does," admitted White Shoes. "I started watching Go2Net when they had this flashy young CEO who bought up interesting-sounding dot com companies for paper, and I was always amazed that the paper kept getting more valuable. Unfortunately, I never bought any of that paper. And also fortunately, I never bought any of that paper."
Mr. Shoes points out that the paper is now near-worthless, and the flashy young Go2Net CEO is now gone. "It's a clean slate," commented Mr. Shoes. "The new merged company, Infospace, is mostly focused on a diversity of wireless projects which I fail to understand. Still, most of the money we make from investing is from large swings in sentiment. The key to Infospace is that a lot of people have heard of it, and yet few have a clue what exactly it is they do."
Mr. Shoes and his colleagues at Bilkway Securities project that 2002 earnings for Infopace will be "a cent or two better than whatever Naveen Jain tells us they will be... and that's good enough for us."
Why the upgrade now? "The number one determinant of market bottoms and tops remains interest rates," says Mr. Shoes. "The current interest rate environment should make mincemeat of the bearish sentiment in short order. The smart money is buying now," he concludes.
Shoes' colleague, Gary Tarantula of Whipsaw Investments, agrees. "Investors need to stay away from companies no one has heard of, and companies whose line of business is too easy to understand. When the Fed decides to rev 'er up, the big money is going to flow into whatever's well known, and whatever sizzles the hottest. Anything that smells wireless will be flying in this market, and people have actually heard of Infospace, might've even lost money on it and will be itching to make it back."
Omaha-based investing legend Warren Buffett, CEO of Berkshire Hathaway, surprisingly didn't flinch when asked to comment off the record about the prospects for Infospace. "Look, I tell people that it's good to invest in Gillette razors and bowling balls because it makes for good press. You don't really buy that crap do you? In my own offshore accounts, I am trading options in high-risk technology stocks. Guess what? I've made 50X as much money doing that as I've made with my little hobby Berkshire Hathaway - what do we own now? Geico? Coke? Give me a break. My 5-year-old grandson could manage that fund. Actually, he does. For playing the tech ponies, my criteria are the same as your guys Tarantula and Shoes mentioned: first, a company has to be hard to understand, and second, a lot of people have to have heard of it. My favorites are tech companies who have merged with companies in totally different lines of business. It's fun. I mean, how else are you going to engineer a good short squeeze unless you have a lot of rubes going short just before you figure out how to cook the books for another few quarters?"
Mr. Shoes states that his "buy" rating will remain in effect indefinitely. An upgrade to "strong buy" will be proffered at an opportune moment (i.e. the day Shoes is selling his shares.) |
