New Trade: Long AOL inc ($AOL) & Short Demand Media ($DMD)

By: ispeculatornew
Date posted: 03.04.2013 (3:00 am) | Write a Comment  (2 Comments)

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There was not much movement this week in my weekly trading as my average return remains close to 0%. As always, you can see my live tech long & short trades and performance here:

2013 Long & Short Tech Stock Picks

This trade feels odd in so many different ways. It’s a fairly different one than what I usually do, especially looking at the quarterly Y/Y growth chart that you can see below. Of course, AOL’s declining ISP business screws up those numbers but they’re still worth considering. You can see the numbers here:

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Two stocks priced at almost identical P/E ratios for next year. I am starting to be a believer in what Ariana Huffington has been doing though and they clearly have a strong strategy for that part of their online content business.

DHX Revenue Quarterly YoY Growth Chart

DHX Revenue Quarterly YoY Growth data by YCharts

Long Dice Holdings (DHX)

AOL has been by far the most difficult stock to trade for me in the past year or so. I’ve shorted it over and over and after getting a much needed break, traded it again a few weeks ago. Once again, I got killed. Am I finally switching to an AOL bull? Not quite. I still think its valuation is way too high and I’d never buy it outright. That being said, one advantage of long & short trading is that I can buy a stock I don’t love but that I think provides a good trading opportunity compared to another one. I do think that while AOL’s overall growth has been fairly small, it has been doing a lot of positive things and is certainly being much more innovative than Demand Media which is translating into strong numbers.  I don’t love going long AOL after so many times of being wrong shorting it.. can you imagine if suddenly the stock crashes down? I’ll hold that thought to preserve my sanity;)

DHX

Next earnings release: April 25th

Short Monster Worldwide (MWW)

Demand Media has performed fairly well in recent months but I don’t hear much exciting coming out of the company. Just a couple of weeks ago, news came out that the company was considering a split. Is that really what DMD is focusing on these days?

MWW

Next earnings release: April 26th

If ever any of you are interested in my technology stock thoughts and picks, I invite you to my tech stocks newsletter, it’s free and you’ll get an email bi-weekly with additional thoughts on many of these names:

 

Disclaimer: I will enter into the trade this morning but have no positions as of this time…

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2 Comments

  1. Comment by Ken — March 6, 2013 @ 2:03 pm

    Regarding AOL, my experience has taught me that people who reverse from a short position to a long one rarely make money.

  2. Comment by IS — March 6, 2013 @ 7:40 pm

    @Ken – Certainly possible, time will tell I guess

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