10-Bagger Week in Review
The man I see as our nation's greatest president of all time never went to college, though he loved learning, and believed that education was "the most important subject which we as a people can be engaged in."
Given that belief, I'm sure that Abraham Lincoln would have been pretty excited by the news this week that Harvard and M.I.T. are teaming up to offer free online courses from both universities. This trend toward free online courses from top flight universities shows that technological advances have the potential to provide greater opportunities to millions of people who never had them in the past. The future is a very exciting place, and we're hoping to profit from it in our 10-Bagger Portfolio.
Below you'll find some other top stories from the week along with takeaways for our real-money portfolio:
1.Is there a tech bubble right now?
According to Counterparties, an Internet fracas broke out this week over whether or not we are in another tech bubble. A reporter for TheNew York Times kicked things off by saying we most certainly are in a bubble and that it will pop eventually. The high-profile venture capitalist Marc Andreessen responded by saying that "it's the weirdest bubble when everyone hates everything."
Takeaway: There will likely always be pockets of exuberance that result in high security prices. But to say that technology stocks in general are in a bubble means that you might overlook terrific companies like motion sensor designer InvenSense. We think it's better to be stock pickers, and let others worry about making predictions about bubbles.
2.Chesapeake Energy and the Aubrey McClendon debacle
Chesapeake Energy (NYS: CHK) stripped CEO Aubrey McClendon of his chairmanship this week, after a series of revelations of questionable actions by the flamboyant founder of the company. Motley Fool analyst Matt Koppenheffer believes McClendon's behavior raises concerns about how Chesapeake has been running, and feels that he should be removed as CEO.
Takeaway: Investing in energy is hard enough without having to worry constantly about whether or not the leader is acting in the best interests of shareholders. We go back and forth about the merits of Chesapeake's assets versus its management team. Ultimately, we intend to pass on Chesapeake, while taking a closer look at Westport Innovations (NAS: WPRT) , which stands to benefit from the same low natural gas prices that have hurt Chesapeake.
3.LinkedIn's performance (and how it compares to Facebook's)
Many refer to LinkedIn (NYS: LNKD) as the Facebook for professionals. We wonder, though, if that's really accurate. LinkedIn's revenue grew 101% last quarter compared to just 45% for Facebook's most recent quarter. Sure, LinkedIn had a smaller base of revenue. But we wonder if LinkedIn's business is actually the more attractive of the two. Clearly, we are seeing that recruiters are willing to pay real money for access to qualified leads from LinkedIn, which appears to be putting together some fairly solid revenue streams going forward.
Takeaway: Carving out a big niche in a clearly defined area appears to be a winning strategy for growing a great business. That's certainly worked for TripAdvisor (NAS: TRIP) , with its hotel, restaurant, and vacation-rental reviews. It appears to be working for LinkedIn as well, which has been equally successful in creating value from its network. Will Facebook also be able to unlock value from its incredible network? We'll be watching very closely in order to find out.
Listen to Charlie
It's fitting that we close this week's review with wisdom from Charlie Munger, who will, of course, be featured at the Berkshire Hathaway annual meeting tomorrow. Munger famously urged investors to "invert, always invert." So the next time you instinctively think a stock or an entire industry is overvalued (or undervalued) be sure to consider the alternative case before making your decision. Munger appears to have had a bit of success following that simple maxim.
See you next week, Fools! Don't forget to follow us @10-Bagger Stocks on Twitter for all of the latest information relating to our portfolio. And if you're interested in learning more about one of our favorite investing ideas, have a look at "Discover the Next Rule-Breaking Multibagger." Grab a copy of the free report now.
At the time this article was published John Reeves and David Meier do not own shares of any of the companies mentioned in the article.The Motley Fool owns shares of InvenSense, LinkedIn, and Westport Innovations. Motley Fool newsletter services have recommended buying shares of LinkedIn, Westport Innovations, and Chesapeake Energy. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.