eBay looking up

I have probably written more about eBay than any other company on this blog. When I first started investing my comments on eBay were filled with optimism about the near term prospects of the stock. Then as the stock continuously fell my posts became more resigned and circumspect.

It could be that eBay is now at an inflection point between pessimism and optimism. The 2009 Q4 results were released last night and marketplace revenue has finally returned to growth.

However it must be remembered that Q4 2008 was the peak of the credit crisis and for the next 3 quarters or so eBay will have some easy comparisons.

So the Q4 2010 results will probably be a better indication of how eBay is growing.

In the meantime some exciting things are happening. In particular payment revenue growth is accelerating. If PayPal can become the de facto payment method for online transactions then the sky is the limit. eBay are away of this and now talk about payments first in all reports. Users who sell on eBay will end up with a PayPal balance. It is much more convenient if they can spend this cash directly using PayPal rather than having to transfer the balance over to another account, incurring fees in the process.

In terms of marketplaces John Donahoe (CEO) is rightly totally focused on the user experience. I was so gratified to hear that advertising revenue is down as eBay optimise the user experience. Hopefully they will get rid of those annoying and distracting banner ads sometime soon.

It looks like Amazon has the big ticket B2C (business to consumer) market pretty well wrapped up but if eBay can stay in the C2C and more obscure B2C markets then it will have a valuable niche.

How investors would like to see eBay trade at Amazon like multiples at some point. If PayPal growth keeps accelerating that could become a reality.

2009 in review

Hello again and sorry for the lack of posts.

One of my resolutions for 2010 is to get control of my early morning time and blog more often. We will see what happens...

So what was 2009 like for me investing wise?

Well it was a lot better than 2008!

My biggest portfolio made a gain of 0% largely thanks to Genzyme having a year to forget. That of course is the problem with being very exposed to one stock but Genzyme should be OK long term. Impressive gains by Tesco and BHP Billiton compensated for Genzyme's misfortunes.

Another small portfolio of mine gained almost 50%, largely down to the recovery of Barclays. My third portfolio gained 27%, again mainly down to the recovery of British holdings such as British Airways and CSR.

Did I learn anything? Well I think the penny is finally beginning to drop. Stop Trading! So many times I have sold a great share that is showing a healthy gain to buy into a "bargain" stock that then keeps on falling. I have been in and out of Google (GOOG) twice and both times I made a nice profit but if I had just stayed in GOOG my performance would have been so much better. At one point a few years ago I held 12 shares of GOOG. If only I still had those 12 shares!

Warren Buffet gives the example of how someone holding one Coke share through most of the last century would have become a millionare with that share alone (although after stock splits he would be left with a lot more shares of course.)

Coke used to be the biggest brand but Google is now. In the UK at the moment they are advertising their Chrome browser on billboards. When was the last time you saw an advert for free software? Google take their quest for market share seriously.

My task for the next 3 weeks is to get 6 shares of GOOG before the Q4 earnings come out. And then keep the shares for at least 10 years!

Funding the purchases will require some selling at a loss; never an enjoyable experience but if I will buy into risky shares like British Airways or RBS that is the consequence.

So a resolution for 2010 is to end the year with significant amounts of Google, Oracle and Apple. These three companies will not be requiring government aid in the near future!