NEWS

Investment Blogs Go Mainstream on Yahoo! Finance

IR Web Report
By Dominic Jones

PITY the investor relations people at Illinois Tool Works Inc. They arrived at work this morning to find that someone named Jason Wood had gained access to Yahoo! Finance and is calling their latest acquisition a “strange, strange deal.”

You can almost hear them asking: “Who the hell is Jason Wood and where did he come from?”
Jason Wood is a technology investor who runs the Ponderings of Woodrow blog. His commentary, along with that of up to 200 other invited investment bloggers, is now available on Yahoo! Finance, the world’s most popular investment website.

In a deal with blogging network Seeking Alpha, founded by former Morgan Stanley analyst David Jackson, Yahoo! Finance is including edited blog posts on its company pages alongside news from mainstream sources such as the Wall Street Journal and Reuters.

The move follows a similar one earlier this year by the much smaller Google Finance investment website, which includes unfiltered blog posts on company pages.

However, with the Yahoo! Finance initiative, Seeking Alpha’s blog contributors now have access to a much larger audience of up 10 million users. Recent research by Thomson Financial and others suggests that Yahoo! Finance is arguably the most influential resource among investment professionals and retail investors alike.

“For Seeking Alpha’s contributors and for bloggers in general, this is a big day,” Jackson said in a blog post.

“Stock market blogs have reached the point where traditional financial media companies can no longer ignore them. TheStreet.com, MarketWatch and even The Wall Street Journal now frequently link to blog posts from their websites,” he added.

Filtered coverage of a wide array of companies

While many companies will likely be worried about bloggers getting such prominence among their investors, Jackson said the deal was good news for companies because Seeking Alpha’s army of contributors “enables vastly broader coverage of stocks than traditional media companies can provide.”

Seeking Alpha, which takes its name from the portfolio management term for the excess return over a benchmark return, selects articles from bloggers based on “a unique slant and rigor” in the work. The editors favor articles from finance professionals and industry experts.

Money managers are expected to hold positions in stocks they write about to demonstrate of genuine conviction in their view of the stock. Authors are required to disclose whether they have a long or short position in the stock under discussion. Seeking Alpha does not publish articles about penny stocks that are easily manipulated.

Contributors to Seeking Alpha are not paid and provide content to gain profile for themselves, their blogs and the services they provide. You can view a list of some of its most prominent contributors on Seeking Alpha’s website.

Rapid rise to prominence

Since its start in early 2004, Seeking Alpha has rapidly gained a reputation among bloggers as the best aggregator of investment blog commentary and information.

In July, Google Finance began providing links to Seeking Alpha’s free earnings call transcripts on more than 400 companies. Yahoo! Finance, which has a paid transcripts deal with Thomson Financial, will not promote Seeking Alpha’s free transcripts.

A short while later, Barron’s, the investment weekly, began including Seeking Alpha’s blog headlines with its mutual funds coverage.

Yesterday’s announcement about the Yahoo! Finance link up is likely to attract new contributors to submit articles and analysis to Seeking Alpha.

Investors get new perspectives

By including blog posts in its information mix, Yahoo! Finance is giving investors access to new and different perspectives on companies they own or are interested in.

What does this mean? Let’s return to Jason Wood and his take on Illinois Tool Works’ recently announced acquisition of software company Click Commerce.

After a seemingly off-topic ramble about Cisco, IBM and HP and the general M&A climate in the technology sector, he gets down to his thoughts on the ITW-Click Commerce deal.
Investors have access to new and different perspectives on companies.

“I’ve seen a lot of software acquisitions, some that made sense, some not so much. But few have left me scratching my head more than this one,” Wood says.

He then goes on to list the reasons the deal is odd for ITW, including that it is the company’s first software company out of 700 business units and the fact that the purchase price was much more expensive than the company’s usual deals.

The blog post closes with no real conclusion, other than that ITW’s intentions are unclear, but that big tech players like IBM and Oracle probably don’t have to worry about competing with ITW for targets.

It is standard blog fare and only time will tell whether investors will use the information or find it valuable.

Whatever the case, it’s out there now. You might want to check Yahoo! Finance for any blog opinions about your company.

For coverage of the Seeking Alpha-Yahoo! Finance announcement, see paidcontent.org and Paul Kedrosky