An investor’s guide to search engine optimization (SEO)

Search engine optimization is about getting a website to rank higher in search engines.  The goal is to increase web traffic without having to pay for ads.

This primer on search engine optimization is relevant to these stocks:

• RetailMeNot (SALE)
• Demand Media (DMD)
• Search engines (GOOG, Yahoo Japan, IACI/Ask.com, MSFT/Bing)
• Phone book companies (YLO.TO, DXM)
• Somewhat relevant to online e-commerce companies (AMZN)

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Beating Wall Street in oil and gas

For whatever reason, it seems that many institutional investors analyze this sector poorly.  This creates wonderful opportunities for short sellers.  To recap, this sector has attractive shorts because:

1. It seems that many institutional investors don’t understand how oil and gas companies inflate their reserves.
2. Inflated reserves are very common among oil and gas companies.
3. Institutional ownership is high enough that there are reasonable borrows on these stocks.
4. Many management teams use the company as their piggy bank to pay for corporate jets, expensive meals, etc.
5. Valuations are high.
6. A few of these companies are pump and dumps.

Mining: who are the sharks and who are the fish?

In general, I think that the underwriters are the sharks and investors are the fish.  As I have written elsewhere on this blog, too much of the industry is focused on mining investors rather than mining ore.

The TSX Venture explained

The TSX Venture exchange is filled with stocks designed to enrich insiders and brokers.  Interestingly enough, institutional investors own some of these stocks and don’t seem to have figured out the game.  Here are some of the patterns:

Notes on lending fundamentals

These are my notes on:

• The concepts behind underwriting loans.
• Loans that will likely end in disaster.
• Finding excesses in lending.
• Areas which might lead to unusually high shareholder returns.

Spinoffs

They’re gimmicky.  Most of the time they lower the intrinsic value of the business due to legal and accounting fees (which I’m not a fan of).  I wouldn’t bother learning about special situations investing in spinoffs.  But… in rare cases they are worth looking at.

Insiders giving themselves special pensions

Defined benefit pension plans give pensioned a defined amount of money each year for the rest of their life.  Unfortunately for shareholders, the risks on this liability are very difficult to estimate and can get out of hand.  Warren Buffett explains the relevant concepts in a 1975 memo to Katherine Graham.  Shareholders are likely better off if the company offered its employees a defined contribution plan rather than a defined benefit plan.

When reading a DEF 14A filing (I have a previous post on things to look for in a DEF 14A filing), it may be worth checking to see if management is giving itself a defined benefit plan while the workers beneath them are receiving a defined contribution plan.  I believe that this is an area where management can basically hide some of its compensation.  Intel and TJ Maxx are examples of companies that have defined benefit plans for management.  In the grand scheme of things however, this practice isn’t that bad compared to other ways that insiders compensate/enrich themselves.

*Disclosure:  Long TJX via calls.  No position in INTC.