Category: Value Investing

Vulture Investing on the Web: Buying Mt. Gox Bitcoin at pennies on the dollar.

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By , February 28, 2014

Distressed assets may be the “extreme sports” version of value investing, but it’s a game as old as money itself.

From Baron Rothschild faking everybody out and going long British gilts after the Battle of Waterloo, to the whole Marty Whitman school of investing in distressed assets, when something implodes, while most people scramble to unload the toxic assets, there is are the vultures who swoop in and sometimes make out like bandits.

The key is to this is creating low risk / high reward setups, so your downside risk is minimal (even if you lose your entire investment) while your upside potential is phenomenal. These types of investments are frequently losers, but the minority of winners win big, enough to make it all worthwhile (if not lucrative) for the people who are practiced at the craft of distressed investing.

So it goes that as technology – and money – evolves, so will the investment scenarios that present themselves. In today’s case, the destruction of the world’s largest bitcoin exchange provider, Mt. Gox, has presented just such an opportunity. Read more »

I am now long RIM

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By , September 19, 2012

Actually I’ve been long Research In Motion for a few weeks now, I started writing this post at the time but forgot to publish it until tonight when somebody commented on my earlier “Ultimate Buy Signal for RIM?” post.

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Who Will Be The Big Winners and Losers of the New TLDs?

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By , August 26, 2011

This is a repost of a guest editorial I wrote for Domain Name News.

When one looks at the track record of introducing new Top Level Domains it is perplexing to see where all the enthusiasm around unlimited new TLDs comes from. So far every attempt to roll one out owes it’s sustenance to purely defensive registrations (.biz, .info) or else it’s degraded into an utter fracas (.jobs) or just plain flopped (.pro)

The latest TLD that isn’t a country code tarting itself up as a pseudo-generic is probably a good indicator of what to expect going forward: .xxx – reviled by the industry it extorts , err, purports to serve and first new TLD that we are seriously considering making a conscious decision not to “grab our name before somebody else does!”. I’m certain it won’t be the last. I believe one of the first things we will see as all this unfolds is a buyers strike in defensive regs. Once that happens everything will go sideways.

So despite the near frenzied hype around these things, I have already gone on record to predict failure for the vast majority of them.

The forthcoming onslaught of TLDs can be divided into roughly three categories: Read more »

Not needing Google: the web version of a “Wide Moat”

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By , October 29, 2010

It has been with interest I’ve watched the discussions about being dropped from Google over the last day. It seems as if the Epik website network has been dropped from the search engine listings. I never really looked at Epik’s offerings, so I don’t have an opinion on it. I think Rob Monster generally has something intelligent to say in his blog. In any case, as one commenter put it:

guess that will send them into bankruptcy. Once google cans you its over.

And I thought, my god, what a horrible position to be in. The reason this topic is so relevant to me is because last week we realized here at the office that easyDNS had gotten delisted from Google for over a month! The amazing thing about it was that we didn’t even notice.

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Comparing Godaddy’s and NetSol’s price tags

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By , September 11, 2010

I was going to comment directly on Domain Stryker’s article about Godaddy’s vs NetSol’s respective price tags, until I read that he was putting me on the spot to say something half clueful about it over here 🙂

My initial comment was to the key differences between the prospect of Godaddy being bought for 1 Billion today and Verisign’s purchase of Network Solutions for 28B back in the dotcom heyday was this: Network Solutions included the registries for .COM, .NET and .ORG.

ICANN later forced Verisign to divest out of the registrar side if they wanted to renew their contract for the registry (and they were also forced to let go of .ORG as well)

So for 28B, Verisign got the .COM and .NET registries, for what looks like in perpetuity. No matter how big Godaddy ever gets, at $8.88 a domain or so, they will always be paying the lions share of it to Verisign (well, for .COM and .NET’s)

That’s not to say Verisign got a bargain on NetSol. They locked up the registry, but given the times, everybody was paying nosebleed valuations for everything, but consider this:

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Online, offline, value-investing still requires a wide moat.

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By , July 5, 2010

A lot of people want to “invest” in websites and domain names. As value investors we have the same requirements for an online investment as we do for an offline one or a publicly traded equity:

  • We can buy it for less than it’s intrinsic worth
  • Safety of principal combined with reasonable return
  • A durable competitive advantage or a wide-moat

Between these three simple criteria, we can eliminate probably 99% of the “opportunities” we see out there to “invest” in a web business or a domain name….

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