When I saw the headline in Barron’s this weekend I thought they were kidding: “[Mary Meeker] Sees Big Opportunities in China”. Mary, the last big-firm Internet analyst standing from the go-go days, is fond of Chinese Internet stocks, those playthings of daytraders and dealers in hyperbole? Say it ain’t so!
Ah, but it is. And better yet, the interview with Meeker is in Q&A format, so we get to speak Meeker right alongside Barron’s. The interview (conducted by Barron’s Eric Savitz) is as much fun as ever:
Q: What if I want to buy a pure play [Chinese Internet stock]?
It’s a fair and forthright question. After all, Mary has been waxing wondrous about the Chinese Internet opportunity for a few hundred words by the time Savitz asks the obvious question. So here’s Mary:
A: The best proxy for the market is probably Sina. They have a leadership position on the advertising side and on the content side, and they seem to have less volatility on the messaging side of their business than some of their rivals. However, the messaging part of the business is in a very competitive environment and coming into a market transition.
Okay, in something of a surprise she seems to like Sina. Then again, she does hedge somewhat toward the end with talk of a “market transitition”. Are you saying that’s bad Mary?
Q: Market transition?
A: From SMS messaging, basically text, to multimedia messaging. A lesson I have learned time and again as an investor is that when I say there is a transition coming, that is usually a time where the stocks are challenged. And the question here is, we have seen the stocks trade down. Is it over?
Well, that settles it. Mary doesn’t like Sina, after all. Good thing Eric asked Meeker this second time. I had been thinking she liked it based on those “leadership” and “pure play” comments at the outset. Just to make sure, however, Savitz asked her to reconfirm that the transition really isn’t over. A sensible decision on his part.
Q: Well, is it?
A: I can make an argument that Sina looks compelling here, based on a long-term outlook. The question is, we may have a lot of wind in our face from a stock-market standpoint over the next six months or so.
Darn, Mary apparently likes Sina. After all, she thinks Sina is “compelling” from a valuation standpoint; all that talk of transitions was just a diversion. Then again, Mary does finish up with that elliptical “wind in our face” comment. Maybe she isn’t recommending the stock after all. Eric?
Q: So, to be clear, you are not recommending Sina now?
A: We don’t cover the stock. We have a market that has significant growth opportunities over the next one to five years. And if we looked at one stock that most effectively illustrates how the Chinese Internet companies will trade, and look at who the market leader is, I would say that is Sina.
Did you get all of that? Mary has just written a 200-page report on Chinese Internet stocks. When asked what Chinese stock is most leveraged to the Chinese market she comes back with Sina, and then waffles wildly back and forth on whether it would be a good investment — before opting out entirely by conceding she and her Morgan Stanley crew don’t even cover the company she has said is most representative of China’s Internet opportunity.
And people wonder why analysts are treated with derision….
P.S. As a blast from the Mary Meeker past, you might enjoy reading this Meeker question from a Microsoft quarterly conference call last year. It was elliptical excellence, using 319 words to say … well, you decide.