The Google IPO contrarianism to which I referred a few posts back makes a tentative appearance in a NY Times business article this weekend. Granted, the scary-sober Fred Hickey also shows up, but you can sense a few portfolio managers sweating to make the case that, given all the skepticism, the Google IPO may be worth a closer look.
Specifically, a portfolio manager from First American calls Google’s balance sheet and margins “compelling”. Another portfolio manager, this fellow from American Century (don’t you love mutual fund penchant for including “American” in their firm name?) , says that he thinks “…people are a little too pessimistic”.
Fair enough. At some level of Joe Investor skepticism the Google IPO is interesting, as I have written previously. After all, if everyone hates it then the offering price will get low enough to compensate for the structural problems, like the dual-class shares and so on.
The trouble is, we need to know how seriously to take the views of these would-be pundits. How potent is their stock-picking?
Well, we can answer that question readily. Here is a five-year graph of First American’s performance (FATAX) versus Nasdaq (IXIC) and the S&P 500 (GSPC):
It is, in a word, unimpressive. And trust me, the American Century fellow’s performance is little better. In other words, our two would-be stock pundits’ opinions need to be about as heavily discounted as the Google IPO does.