Hampton Lintorn Catlin

Stocks: VM + ZIP

I don’t know if people know this about me, but one of my hobbies is trading stocks. I’m a computer nerd whose a closet business nerd. Anyhow, I’ve recently been pretty active in my portfolio. I bought Apple (AAPL) in 2004 and put most of my (tiny) assets into it. At the time, I was interested in buying a Mac and so I thought that the price was a little low. This is the chart from when I bought to when I sold. Its not that I think Apple’s in trouble, I just think the price has “adjusted”. I mean, how much more positive wall street buzz do they need? I’m looking for my next undervalued stock.

So, my tiny assets turned into bigger assets. And now I’ve put a lot into two companies. First, is one that I’ve been working for… Ziplocal. The stock has had a rough go, but I’m seeing the makings of a huge turn around for them and I’m just honored to be involved in it. So, I’ve decided to put my money where my mouth is and get into that one pretty strong. I mean, at this point, its hard to go lower. And, I really have a lot of faith in their management and the team they have together.

The second stock I’ve put in on strong is Virgin Mobile USA which IPO’d a few weeks ago. The main reason I bought into it is that several people I know use the service and would recommend it strongly. Their branding is young and they are being very aggressive in a market space that is already (admittedly) pretty crowded. There are a couple things I like. First off, Virgin Group companies tend to have very strong financial pasts. That is to say companies occasionally explode because of bad financial management (regardless of the functioning of sales). I put Virgin companies very low on this list. Branson has a lot of smart people around him that keep their eyes on every number for his vast empire of separate companies. And each of those companies have private and public investors. That means lots of eyes on the books. Secondly, they are willing to take risks with new idea, which I like.

Virgin Mobile just announced that they are going to let users upload wallpapers and ringtones to the online store and make money from them. That is, if your a 20 year old in art school with a Virgin phone, you can make $0.10US per download of anything you put online for sale with your handset. That’s an amazingly powerful idea! Also, they announced that they are going to allow people to list themselves in phone books and listing services. They are speaking to my generation with that. I don’t own a home phone. And, I have lots of minutes. So, I’d much rather have my number listed for someone to find. Cell phones are no longer secret exotic numbers. Its the number that every service, person, and group I know has on record for me. I’m not saying everyone is going to do it (or that they should), but I get excited that Virgin Mobile is thinking outside the tradition box for a cellphone company.

The last thing I really like about them is their overall pricing model. Their entire system is automated and easy to use. Their entire network is set-price for them because its really owned by another operator (or Bell in Canada) and they pay per minute and you pay per-minute. They also don’t keep stores. That means, their sunk-costs per customer are just the price of the phone-discount. Otherwise, every customer that goes past their profit-line (about 6 months of use) is nearly pure-profit on a per-unit basis. That’s a fantastic business proposition in my book.

In the computer world, we’d say that they are amazingly “scalable.”

Anyhow, I haven’t really posted about this before. And its a bit weird to post about my stock purchases. But, its a topic I get really excited about and I wanted to share with my readers.


Comments

Oct 24, 2007
Carl said...
Alex P. Keaton lives! In Canada now!
Oct 26, 2007
iolaire said...
Thanks for the post. I'm a VM fan and read that the IPO was coming. It was a nice reminder and the stock price is down from the IPO. I'll buy now.