CymorFund Stock Pick – Buy Facebook (FB)

Whats-Hot-or-Not
Periodically we publish our stock picks. Stocks that we like are “Hot” and listed below. Stocks not considered hot are sold.

Since inception in February 2013, our picks has provided a 35.75% return. See our record and statistics on “our Performance” page.

 

Social Media Computer Key Showing Online CommunityBuy FaceBook Inc (FB) Recommended Buy at $26
Facebook is an interesting story that everyone watches. Facebook is a phenomena that changed the world. Everyone knows Facebook. You can’t ignore Facebook. The best example of Facebook’s importance is an invitation to a social event I just received, It used to be that invitations were sent by ‘Evite”, or emails, or even an old fashioned bit of paper. Now, those methods are superseded by a simple posting on a Facebook page.

The Depth of Market Penetration by Facebook 
Facebook has been putting a lot of effort into its mobile business, which now has 751 million monthly active users as of March 31, 2013, an increase of 54% year-over-year. That puts mobile on a faster track at the moment than Facebook’s desktop business, which currently has 1.11 billion MAUs, an increase of 23% year-over-year.. This means that most  of all active Facebook users access the site mobily daily. One cannot ignore this amazing statistic. The latest announcement by the company show these numbers ARE GROWING. A staggering achievement that bodes very well for the company’s future.

Facebook’s Stock Price
Facebook had a public launch at $38 per share in May 2012, which was substantially higher than initial estimates. It jumped to over $40 in the first day of trading, but then started its downward slide, reaching a low in September 2102 of $18. The view was that although Facebook had an enormous following, translating that following into revenue just wouldn’t happen at a profitable rate.

The share price recovered somewhat in late 2012, early 2013 and has since traded in the $25 to $30+ range. When one looks at the company’s financial stats, they are not impressive. The current market cap is about $65 BILLION which is a bit staggering, especially as the revenue (based on the latest quarterly report annualized) looks to be about $5.5 billion, and earnings per share for the quarter are a tiny $0.06. The is about a 550 p/e ratio, which is a joke compared to Dow Jones historical averages for traded companies.

The Current Stock Price
Since reaching a high of almost $29 at the start of May, the share price has shown a continuous decline, is currently at $26.67 and looks to be headed lower. This is a very good buying opportunity, and will result in a short term gain, and probably a long term score. Be prepared to buy at $26.00 or lower. It is the opportunity.

Why Facebook?
There are some very positive aspects to Facebook, as well as the enormous clout on society that Facebook has that cannot be ignored. It’s fun to bash Wall Street and make jokes about how the initial share offering was too high, and how those that listened to Wall Street have lost money. However a review of what is currently happening shows a different picture.

The Holy Grail is mobile advertising revenue. Use of desktop computers and sales of desktops are decreasing, while the opposite is happening for mobile devices., whose use continues to explode. Facebook’s  effort is to make more money from mobile advertising and this revenue in the latest quarter exceeded analysts expectations. In an interview, CEO Mark Zuckerberg said he was committing a large number of resources to catch up and become a mobile company – both in terms of user experience on mobile devices as well as in terms of advertising. This investment has started to pay dividends, as the company posted its best revenue quarter in its brief time as a publicly traded company – with one-third of the revenue coming from mobile devices and more than 60 percent of users accessing the network from a mobile device. This revenue source is GROWING.

First-quarter sales rose 38 percent to $1.46 billion. The bulk of Facebook’s revenue is still coming from the desktop, but  considering that its mobile business was non-existent last year, this is very promising.

Buy Facebook Inc. (Nasdaq FB) $26.00.

This dip in the market is a buying opportunity and it comes at a time when the future looks very bright.

 

 

We may or may not have positions in the securities we name. In making an investment decision numerous factors must be considered including portfolio balancing, timing, cash and capital reserves, asset allocation and other factors. Readers are strongly advised to do their own research. Matters discussed contain forward-looking statements that are subject to risks and uncertainties and actual results may differ materially from any future results, performance or achievements expressed or implied.

Views expressed are opinions and not investment advice. Persons investing should retain a licensed professional to guide them and  not rely on the opinions expressed herein. This report is neither a solicitation nor a recommendation to buy or sell securities. We are not a registered investment advisor nor a broker-dealer. The information contained herein is based on sources which we believe reliable but is not guaranteed as being accurate or a complete statement or summary of the available data.

 

By Larry Cyna

Mr. Cyna is an accomplished investor in the Canadian public markets for over 20 years, and has managed significant portfolios. He is a financing specialist for private and public companies, and has expertise in real estate and debt obligations. He has assisted private companies accessing the public markets, has been a founding director of public companies and continues as a strategic consultant to selected clientele. He is and has been a director, a senior officer and on the Advisory Board of a number of TSX and TSXV public companies in the mining, resource, technology and telecommunications sectors, and the Founding Director of two CPC’s with qualifying transactions in mining and minerals. He was an honorary director of the Rotman School of Management MBA IMC program, has completed the Canadian Securities Institute Canadian Securities Course & Institute Conduct and Practices Handbook Course, was a former Manager under contract to an Investment Manager at BMO Nesbitt Burns, a roster mediator under the Ontario Mandatory Mediation Program, Toronto, a member of the Institute of Corporate Directors of Ontario, a member of the Upper Canada Dispute Resolution Group, and the Ontario Bar Association, Alternate Dispute Resolution section. He obtained his designation as a Chartered Accountant in Ontario in 1971 and was the recipient of the Founder’s Prize for academic achievement together with a cash reward. He became a CPA in the State of Illinois, USA in 1999 under IQEX with a grade of 92%. He is a Member of the Institute of Chartered Accountants of Ontario and the Canadian Institute of Chartered Accountants. He holds certificates in Advanced ADR & in Civil Justice in Ontario, Faculty of Law, University of Windsor, certificate in Dispute Resolution from the Ontario Institute of Chartered Accountants. Previous accomplishments are Manager of Cymor Risk Consultants LP specializing in Risk Management Assessment; CEO of Cyna & Associates specializing in mediation and ADR; Founder & Senior Partner of Cyna & Co, Chartered Accountants, a fully licensed and accredited public accountancy firm with international affiliations; and was a partner in a large public accountancy firm. Mr. Cyna is well known in the Canadian Investing community. He is invited to, and attends presentations given by public companies usually 3 or 4 times each week. These presentations are intended by the various hosting companies to present their inside story to sophisticated parties and Investment Managers for the purpose of attracting funding, or of making parties more interested in acquiring shares of those companies. Being a part of this keeps Mr. Cyna deeply involved in the current market and leads to numerous investment opportunities.