Google’s (GOOG) next billion dollar business: A Google hedge fund (part 4 of 4)

By: ispeculatornew
Date posted: 04.09.2010 (5:00 am) | Write a Comment  (1 Comment)

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In the past 3 days we discussed the more obvious ideas for Google’s next billion dollar business and then some less conventional ones such as becomming a financial data provider to compete with Bloomberg, or even launching a research arm to sell all of its valuable data.

But the fact remains that Google could very well use all of the knowledge and data for itself by trading on it and becomming a hedge fund. Laughing out loud by now? Not so fast! Sergey Brin, one of the co-founders did express interest in the idea in the past so to not even consider the idea would be foolish.

Legal Issues

Just to clarify, when I say a Google hedge fund, I do not mean actually trading under Google’s name because of all the legal implications involved. Rather I mean Google creating and owning a hedge fund to manage its money. Legally they would be independant but in reality they could be close physically and have many business relationships.

Why do it?

I can think of two main reasons to do it. First off, Google has the best knowledge currently known to man and in a financial system where data and speed are king, I can’t think of a better advantage. They also have the technical knowledge to invest in sectors such as technology.

The second reason of course is that Google has tons of cash yielding low interest and being managed by outside investors. Having its own investment arm would no doubt help Google better serve its shareholders.

Transparency

One of the main problems would probably be shareholders having major doubts about what is happening, the risks involved, etc. Google has never been known as a very transparent company but I would say that in this case it would have no choice than to give more information than would be required by law, to avoid hurting the whole company’s standing

It already is a hedge fund in some ways

With all of the mergers and acquisitions being done, smaller projects being invested in, Google is already spending a lot of energy on company valuation, the line between the two is smaller than we could think.

Any other ideas?

I just gave out three possibilities that could become billion dollar businesses for Google and although they are medium to long term possibilities, I think they are very realistic. Do you have any other ideas or perhaps comments about mine?

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1 Comment

  1. Comment by Zavi — April 20, 2010 @ 2:52 pm

    Don’t think it’s a great idea. This would be a divergent business for google. Better to concentrate on their strong businesses. You are being too innovative hahaha

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