Internet Information Providers

We did an analysis on the internet information providers industry back on July 27 2016.

The names from this industry are listed below


The topic of conversation will be to see the 10 month performance along with how each level has compared to itself from July to now.


The top 5 from July of 2016 was the following

  1. FB (+23%)
  2. GOOGL (+25%)
  3. TRIP (-33%)
  4. ATHM (67%)
  5. GRUB (47%)

Performance for the XLK (tech sector ETF) was just around +20% to put this into perspective

The top 5 equal weighted JXM performance was +26% (Outperformance to sector by 6%)

The bottom 5 equal weighted JXM performance was +10% (Underperformance to sector by 50%)

The top 5 vs bottom 5 shows why the JXM sort is very important.

4/5 winners or 80% success rate (80% also outperformed the sector) with one really bad loser (TRIP).    This is a non biased run to show the longer term investor some of the capabilities of a buy and hold for 10 months.   This doesn’t include stop losses or any other type of re run / re sort.

With that said, Trip was removed from the top 5 many months ago so more active users could have closed that loss much earlier (I personally like the 7-8% stop-loss rule on all new positions).  The only trigger using a stop-loss would have been TRIP.   With that hypothetical, the equial weight top 5 jumps to +31% or +11% above the sector.  With some trading skills, we would expect some to actually improve or increase these gains

When you take a micro look into why TRIP may have failed you notice two things right off the bat.  The valuation score was a red flag (26%) vs run average of (50%) and those explosive growth numbers were probably from bad previous quarters or possible negative growth to slighty positive growth (skewed %) (but that would require further review).  The fundamental score of 45% was also below the run average of 52%. The tech sector scoring allows for some valuation concerns because of the nature of this sector but when you take away growth and technicals, TRIP was a below average company


Next I would like to review some of the comparisons from July til now (May 10th)

LNKD has recently been acquired since the July 16 run so you will notice only 23 companies are now listed


The new top 5 (May 10th data) shows the following names

  1. GRUB
  2. FB
  3. ATHM
  4. GOOGL
  5. YY

GRUB has been really strong lately so I would like to show a before and after of why it moved up our ranks


The left is 7/27/16 vs the right of 5/10/17.  Nothing much really stands out except upticks in almost every category and nicely above the run averages.  One of my favorite levels (lvl 5 – Rules) really nailed this name back in July of 2016.  That 66% score is very strong and the stock has produced nice gains

The above image also shows the industry run averages (before and after)

While fundamentals are basically flat across the industry, technicals are slightly down while some valuation concerns are starting to show (-8bps).  Guru and rules are also pretty flat but growth overall has improved which is usually good to see.

It’s also nice to see how companies rank against their peers and most importantly how they move around the ranks.  Movement can tell its own story sometimes going in either direction.





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