Friday, July 24, 2009

An Undiscovered Gem from Barron's?

Visiting Yahoo! Finance, I saw an article headline from Barron's that intrigued me, "The Best Bank You've Never Heard Of". I was hoping the article might be about some great micro cap bank I'd never heard of, but guessed it would be about a mid cap bank I already knew about, e.g., maybe Hudson City. I guessed wrong though: the bank was the mega cap multinational Santander. Is this is the sort of 'undiscovered gem' readers can expect from Barron's?

This article is my most recent reminder of why I don't read Barron's regularly. The second most recent reminder was this article back in May, which was listed under the "headlines" tab at the time for a stock I own, U.S. Energy Corp (USEG). At the time, this article wasn't available online, so I went to Barnes & Noble and looked for it in the dead tree edition of Barron's. Here was the one sentence that mentioned USEG,

Companies like Cameco (ticker: CCJ), BHP Billiton (BHP), Rio Tinto (RTP) and U.S. Energy (USEG) mine and/or trade uranium, although its value contribution to their shares is overshadowed by the many more popular metals these firms also trade.

Reading that, I thought: Is it too much to expect a Barron's writer to know at least as much about this company as me? U.S. Energy Corp. neither mines nor trades uranium, and, in fact, sold most of its uranium assets to Uranium One two years ago, as I have noted on this blog.

Barron's benefits from the inertia of its brand and of its readership. When I got out of college, I worked for a few months at a tiny, over-the-counter investment bank/brokerage in Manhattan where I was supposed to read Barron's every weekend. So I did. I'd read Alan Ableson's column, which was a little like Louis Rukeyser in print, and then I'd slog through the rest of it. I soon figured out that we weren't actually expected to learn anything useful from Barron's; we were supposed to read it because the affluent investors we were calling on read it, and they might mention something from the most recent issue and expect us to be familiar with it.

When journalists lament the decline of the print business, they ought to consider that the Google- and Craig's List-powered disruption of the advertising model isn't the only reason for print's decline; so is the decline of journalism itself. A lot of what passes for journalism today simply isn't worth paying for in any medium.


JK said...

I had long ago written off Barron's as a mediocre publication after seeing its articles pasted on a popular forum....

Regarding the death of media, have you been following Cuban's blog recently? He's had a string of solid posts. (BTW that bogus insider trading charge of his was thrown out of court) In one of the recent posts he predicts the demise of the "freemium" model of web content we are used to, because obviously it isn't paying any bills. Right now we are getting "better-than-free" on the internet because wealthy investors with their heads in the clouds are still ok with losing money. Implicity, via derision of these volume-based business business models, he calls internet advertising hopeless (obvious to any experienced web-surfer). He talks about how any business built on "free" will have to control its distribution, but you wonder how it is possible for media companies to do so? The only way I can think of is by a consortium of media outlets forming a cartel and approaching ISP's to put a universal small surcharge on their customers internet bill in exchange for the content.

Paul Price said...

The value of articles from Barrons, the Wall Street Journal,
Forbes, Fortune, the Economist etc. all vary tremendously with the authors of those pieces.

Some are total crap while others are quite perceptive.

It never hurts to read what others are saying and then applying your own filters to see if they pass the smell test.

DaveinHackensack said...


I hadn't checked Cuban's blog recently, but I did see his comments on this thread from Fred Wilson's blog, "The Internet is Alive and Well as an Investment". Interesting discussion there, which included a discussion of "freemium". I think it was James Altucher (who has started a couple of successful Internet companies) pointing out that there's nothing new about the concept of "freemium" (i.e., giving free samples) and that this was basically a way for the author of the book on the topic (I forget his name offhand) to cash in on the lecture circuit.

That sounds a little ironic and hypocritical to me. Is he giving away his book free? Giving his lectures free of charge? Of course not.

A point I made on that thread was that mostly free models might work for sites with millions of hits, backed by venture capitalists like Wilson who don't mind losing tens of millions of dollars waiting for hits to turn into dollars via advertising or some such, but that this isn't a viable model for most small entrepreneurs. For example, although I will offer a minimal amount of targeted ad spots (modest, nothing crazy) on the sites I'm developing, I don't expect them to be economically viable based on advertising. My hope is that users will be willing to pay for the services I am spending my money, time, and creativity to develop. We'll see (actually, one of these sites will have a free area).

JK said...


That's probably true, I haven't read many Barron's issues, but from what I have read it doesn't deserve its reputation. I find the articles by people who actually invest, as opposed to hack financial reporters, more interesting. I wonder if there is a market for an investing magazine written by actual investors? Like a print version of Seeking Alpha...with quality control and editing of course.

That is an interesting discussion. There's a big difference between Altucher's businesses, which he notes are cash-flow positive from the start, and VC-backed subsidized free services like Twitter, Facebook, and Youtube. (I think Fred's VC firm has been behind a couple of those) Tangible-product businesses and a high quality service businesses will always be successful on the internet. It is doubtful that money-losing, centralized and free "nifty" non-essential services dependent on (future) advertising models that its customers don't want will continue to attract funding. VC's have been dependent on the greater fool being around to dump their offerings on. But only so many massively unprofitable Youtube/Myspace/Facebook deals are going to happen before interested parties evaporate. When one of these go straight to IPO, dumping the crap on naive retailers due to a lack of corporate interest, the end is probably near.

It will be interesting to see what AOL's financials look like when it is spun off.

DaveinHackensack said...


I generally agree.

Some really interesting stuff comes up in the discussion threads of Fred's blog though. For example, in the thread of the post I linked to before, Fred responded to someone's point about the difficulty of average investors (i.e., no VCs) making money investing in Internet companies by writing,

"well i made $130/share buying goog at $270 in november and selling it at $400 a month or two ago. that was easy."

Unfortunately for Fred, he Twittered his recent GOOG trades (his firm is an investor in Twitter, I think). A commenter looked up those Tweets and wrote,

"Easy money Fred?

Out of fairness to your readers, you purchased Google stock on February 28, 2008 (it closed at $475.39). Well after it had formed a clear top. And you purchased more on September 29, 2008 at $400.02. You continued to purchase more until the stock hit bottom.

You may have well made some money, but promoting a $130 gain on the lowest trade is misleading."

JK said...

Yeah, I saw that, funny stuff. I LOL'ed.