Today we received an email from an enthusiastic visitor to our web site and we would like to take a moment to examine their complaint and what we may learn from it. We welcome criticism (even the enthusiastic kind) because we are just as passionate about investing as many of our visitors and clients are. Input like this is invaluable to us, and we rarely find it off the mark completely. When you build research systems and platforms, it is all too easy to get so close to the product that you can’t see what a first time visitor might see.
So, first, let’s look at this user’s email that was sent:
Gentlemen,
I stumbled across your site and felt compelled to contact you. I looked at ONE stock in my portfolio – InterDigital – IDCC, read your initial WORD OF CAUTION posted below ”InterDigital, Incorporated (IDCC) has experienced a very significant drop in earnings and/or earnings estimates. In and of itself this drop in earnings could be an indication of greater troubles within the company………. regarding the company’s dropoff in performance.”
WHAT ARE YOU SMOKING???? You might re-check IDCC’s last earning release, current litigation about to be resolved against Nokia and REVISE your statement. Disingenuous at best – slanderous I’d say.
I cannot possibly see paying a modest PENNY a day for such mis-information. Based on that overview of one stock alone – your site is TRASH – at BEST.
Sincerely,
“Enthusiastic Investor” (not his real name)
Obviously, this visitor is pretty upset with us, and despite his questioning of our smoking habits, we wanted to dive in and see if he had a point regarding IDCC. So let’s start with IDCC and then address what are very real concerns of this visitor regarding what a non-subscribing visitor sees at Ockham.
At Ockham, we have valuations on thousands of companies, and we look at a stock’s fundamentals from a long term point of view. In this case, the stock of interest, InterDigital (IDCC), has had a pretty rocky past year and the earnings have really been all over the map. From fiscal 2008 to fiscal 2009, according to data provided by Zacks, a consensus of analysts predicted that earnings would drop by more than 25% on a year over year basis. In our platform, that triggers the addition of a note on the research report that says,
A Word of Caution
InterDigital, Incorporated (IDCC) has experienced a very significant drop in earnings and/or earnings estimates. In and of itself this drop in earnings could be an indication of greater troubles within the company.
Please take a moment to look at the RazorWire feed on the right hand side of the report to find more information regarding the company’s dropoff in performance. Each time InterDigital, Inc. is mentioned on business television recently should be displayed. This helps bring you up to date on any major issues they are facing right now.
Therefore, (and as always), check additional sources and available information regarding IDCC before making an investment decision.
The intent of this note is simply to alert the reader that this stock might be experiencing a temporary (or not) issue that has impacted its profitability substantially. We are not saying that this is not a suitable investment, but rather that investors should be informed going in that something is amiss. In this visitor’s email, he seems to have not gotten this message as that vital portion of “A Word of Caution” has been removed from his quote of our language. That is troubling because it means we perhaps didn’t make our point clearly.
As this investorpoints out, IDCC has in fact turned in a great last quarter and appears to be ramping up strongly. But again, before we become one of those websites that spouts off ratings on companies without bringing attention to real fluctuations and concerns in a company’s long term fundamentals, we must pause. There are very real fluctuations in the case of IDCC year over year and quarter over quarter, and an informed investor must be aware of those facts.
What this visitor revealed to us is that for a someone who is not logged into our system or a subscriber, the “Word of Caution” may appear to be some sort of rating or opinion. This is not the case, but since we usually view our platforms the way paying subscribers do, we hadn’t noticed that without being able to see what our current rating is (actually “Fairly Valued” in the case of IDCC) this “Word of Caution” may be perceived too strongly.
We currently have the stock as “Fairly Valued” and as you can see from the ratings history chart, we have advocated buying on the dips as recently as November of last year. Additionally, the non-subscribing visitor cannot see all of the content on the RazorWire news tracking tool, which means they may not follow up on our cautious tone . Because we normally look at the site from the perspective of a subscriber (which we are), this has shown us that we need to make some changes to the language used in our “Word of Caution” section.
In conclusion, we will be using this opportunity to improve the way a first time visitor interacts with our site and our research platform. Constructive criticism is always welcomed at Ockham. We will not be removing the “Word of Caution” section because we feel that it is important to make investors aware of anomalies that otherwise might have been missed when appropriate. Instead, we will clarify the language with consideration for those users that cannot see the ratings or RazorWire news.
