Waypoints Release 98.0: short questions … short answers

Q: Portfolio Update: For context, our gross exposure remains very low at 62%.  We have 39 longs and 57 shorts. Very low concentration: the average size position in our long portfolio is 0.8% and our largest position is 1.7%.  In our short portfolio, the average position size is 0.5% and our largest position is 1.3%.

• Top longs: Ansys, Vistaprint, Apple, Autonomy, Adobe, TSMC, Sybase, Concur, Qualcomm, Dun & Bradstreet, SPSS, Akamai, Monsanto, Google, Salesforce.com, Cisco, Strayer, Nintendo, Tetra Tech.

• Smaller longs: Ctrip, NICE Systems, Quanta, RuggedCom, ADS, Informatica, RIM, Accenture, Oracle, Rogers, Stratasys, PROS Holdings, Amdocs, Apogee, Xing AG, Autodesk, Trimble, Logitech, Atheros, Activision.

• Among our larger shorts: Dell, Lexmark, Aegis, Avid, Sony, Ebay, Brooks Automation, VMWare, Motorola, Sprint, Clearwire, NY Times… 

Q: Also in Waypoints…
A: Pip discusses how our Naked Without Data societal shift is reflected in our portfolio, noting that 28 of our 39 longs are supported by the shift.  Among them: Apple, Ansys, Informatica, Qualcomm, RIM, Google, Autonomy, Dun & Bradstreet. 

Q: Do we have shorts that are affected by Naked Without Data?
A: Yep, plenty.  30 of our 57 shorts are affected by the shift. Here, we see many that may have been “data winners” before (eg, newspapers, Ebay) but who are being displaced by a next generation of companies and technologies that capture data and convert it do wisdom as effectively … or more effectively.  More on page 9…

Q: Can’t “data” help the advertising industry since marketers can use data to target ads more effectively and increase “relevancy”?
A: We think “Naked Without Data” is a bigger threat to the ad spending pie than it is an opportunity. While data may help some advertisers “target” more effectively in the online domain, we expect CEOs to increasingly streamline marketing budgets because – among other things – there is no useful data to prove the efficacy of advertising on mediums such as TV, radio, or newspapers where 60-70% of all ad spending is still done.

Q: Has there been any follow-up work on specific companies after our trip to China to study the online video game market? 
A: Yes, and today we dive into Tencent.  For context, one of the more notable takeaways from our visit to China was how crowded and aggressive the competitive landscape in the online game market is. So, most of our calories are being spent examining the competitive field to assess whether any companies can emerge from this fray more successfully than others in a sustainable fashion. Here, Tencent has an opportunity to leverage their 400mn+ users of their leading instant messaging product and the 150mn+ users of their leading social network and cross-sell games directly to that audience – as opposed to … say … fighting for the incremental user in “the channel” (Internet cafes)…  a key competitive differentiator.  We dive in deeper on page 11…