Alan Meckler is worth paying attention too. But it's best to watch what he does, and not what he says.
He has made a fortune as an Internet entrepreneur, and knows when to get off a fast moving train. He sold his Internet trade show businesses at the top of the bubble, and kept for himself, a large stake in a small stub of a company, then called Internet.com, which he later fashioned into Jupiter Media (JUPM).
Meckler isn't shy about touting this stock on his blog, and takes it personally when the shares are sold by investors. He usually wins in the end; but it can be a bumpy ride tagging along with Mr. Meckler.
Meckler is old-school. He's a hard core business guy who is bottom line oriented. He isn't out to squeeze every last buck from his enterprises, and doesn't mind selling assets too soon. He exited the search oriented properties of Jupiter some time ago, even as search was still a white-hot business.
Meckler isn't one to hold onto every share he owns, either. He often sells shares at opportune times. Therefore, when he comments on his stock, I listen carefully.
A recent episode provides us an example of how tough it is to make a buck by listening to CEOs on their blogs. But first, lets go back and review 2005 and 2006. Meckler was a big seller of Jupiter Media stock at prices north of $14. His timing proved fortuitous as late last year, some problems developed at Jupiter. At that point, he stopped selling, and started talking.
Here is what he wrote last November 14th when the stock price was trading at $5.67.
"As to value, I know that our image assets, music assets and related content assets are worth a heck of a lot more than our present market capitalization. I also know that our online media division should be worth at least $2.00 a share or more. Now tack on about $35 million of EBITDA (before stock compensation). This all means (to me at least) that at our present price we are cheap. However for those out there that think we are going to zero sales, then I guess our present price is exorbitant."
When I parse this, here's what I think he is saying. There are three components to his valuation. First is the online content assets. Second, the online media assets. Third he talks about $35m of ebitda, which to me sounds like a double count, but so be it.
Meckler said that his content assets alone were worth "a heck of a lot more" than $202m, which was the market cap of the stock on Nov 14th, 2006. He then said that the online media assets were worth another $2 a share or more. The floor valuation then, according to Meckler, seems to be something pretty far north of $7.67. That was four months ago.
Fast forward to late February, 2007. Word leaks out that Jupiter is in discussions with Getty Images, a company that Meckler often rails against on his blog. The price of Jupiter quickly jumps to well over $10 a share, but backs down when Meckler makes a blog post referring to a press release issued by the company about the negotiations. Jupiter issued a press release on February 22nd indicating that indeed it was in discussions with Getty, at a price of $9.60 for ALL of jupm. I thought that was a rather low price, given what Meckler said on November 14th, only three months earlier.
Keep in mind that Getty had no use for the Jupiter online media assets, and thus had to design a deal that didn't include taking them on. It seems as though Meckler was going to be the "third party" buyer of the online media assets, which he once valued at $2 a share or more.
Meckler pulled a similar gambit when he sold his Internet trade shows to Penton Media, but retained the Internet.com "stub" that became Jupiter. That deal worked exceedingly well for Meckler, who pocketed a large sum for his trade shows, and captured more upside by retaining a large stake in a public enterprise. Now it looks like he was structuring a similar situation for himself this time around.
My hunch is that this is where negotiations broke down---the sale of the online media assets back to Meckler, and for what price. Meckler does not like to over-pay. ;-)
Now, JUPM stock is only slightly higher than it was in November of 2006, when Meckler performed his back of the envelope valuation of Jupiter. But he is comparatively silent on the price now. The only mutterings of his were in a post on March 8th, where he wrote "Don't tread on Jupiterimages." The JUPM earnings release was delayed until mid March. When the report finally came out, the market reacted quite negatively.
The moral of this story is that while Meckler is a proven money maker, a savvy old pro that will usually win big in the end, you must be careful about following him when he speaks. ;-) In fact, it's better to watch what he does and mimic that, for example when he was selling some of his shares at high prices.
He was a substantial seller of Jupiter above $14, but appeared to want to sell the entire company for $9.60, only months after publicly valuing Jupiter at what seems to be a much higher price.
Bottom line for me: If Alan chooses to use his blog to tout the prospects of his company, Jupiter, don't fall for it. ;-) Buy Jupiter stock when HE takes out his wallet and pulls out real green money (and not via option grants) and buys Jupiter stock. And not until.
