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I'm a fan of
Mark Cuban's blog
, and a recent post in which he discussed his current long and short stock positions led me to take a closer look at the names he mentioned.
First off, it should be noted that while Cuban doesn't receive great plaudits for his stock-picking, his sense of timing during the dot-com days was uncanny. He started his company, Broadcast.com, in 1995, brought it public in 1997 and sold to
at the near peak in July 1999. Then, from all reports, he hedged or sold his $3 billion worth of Yahoo! at its top. Be it luck or skill, I wish I had had as much of either in my own dot-com experience.
Among his long picks, Cuban likes
(LGF - Get Report)
(RENT - Get Report)
(NSIT - Get Report)
(SIGM - Get Report)
and some other small-cap names.
His shorts include
and the small-cap
I am in general nervous about shorting, even in a bear market, so I won't comment on these two shorts. However, I will note the statistic that even in the down year of 2001, the CSFB Dedicated Short Bias Index was negative on the year. It's difficult to short, unless you have deep pockets to withstand the pain that comes from volatility. As noted above, Cuban has those pockets.
I wanted to like Lion's Gate, particularly in light of Cuban's comment: "The only indie film library available, willing to leverage new media for revenue." Sounds appealing and also Lion's Gate is certainly a potential acquisition target for its library. That said, the movie industry just seems too volatile and too hit-driven to me, and although it might be a good pick, I don't think there's the same level of margin of safety that he has in his other picks.
The two longs that I like are Insight and Rentrak. Insight operates in the IT services space, which I've
written about before
. The basis for my bullish view on IT services is simple: From 2000-02 we didn't just have a recession, we had an IT depression. In Manhattan alone, there were more than 150,000 jobs lost in the IT industry. Heck, all my favorite coffee shops went out of business in the Flatiron district because of all the jobs lost. So a company that survived that, built up its business, and preserved its balance sheet will survive just about everything. And this is important because companies do not want to outsource their IT to service providers they believe will go out of business in the next downturn.