Valuentum members have been blessed by the good fortunes of eBay (click ticker for report: ). The firm has been one of the best performers in the entire market after it registered the very top rating of 10 on the Valuentum Buying Index (VBI) in September 2011. Very few firms ever score a 10 on the VBI, so when a company does, members take close note. Google (click ticker for report: ) was the most recent firm to do so, and it has since rocketed to new all-time highs.
In most cases, we tend to add firms to our Best Ideas portfolio when they register a 9 or 10 and remove them when they register a 1 or 2 on the VBI (click here for our purchases of eBay). We may tactically trade around a position in our Best Ideas portfolio once it’s been added on the basis of diversification, macroeconomic, or technical considerations. eBay has never registered a 1 or 2 on our VBI, so the company remains one of our top holdings in our Best Ideas portfolio.
Below is an excerpt of page 16 of eBay’s stock report, where we disclose the ratings history of the company. Transparency is vital to earning our members’ trust, and we disclose the rating history of every company in our coverage universe on page 16 of their respective reports.
Through the course of much of 2011, we were pounding the table on eBay, saying it had roughly 50% upside potential and that its score of 10 indicated the highest likelihood of price-to-fair value convergence. The VBI is a forward-looking indicator that considers both the fundamentals and the timeliness of a particular investment opportunity.
And just last week, the news kept getting better for eBay. Not only did the company get a glowing and favorable write-up from Fortune, but comScore also reported that full year 2012 US retail e-commerce spending advanced 15% from a year ago. According to the digital measurement firm, this represented the fastest pace of growth since before the recession. Further, comScore noted that the fourth quarter of 2012 was the first quarter ever that breached the $50 billion mark (sales came in at $56.8 billion!). And we agree with comScore chairman Gian Fulgoni that “2013 will build on the momentum of the past year,” benefiting both eBay as well as online juggernaut Amazon (click ticker for report: ).
All things considered, Valuentum members have been incredibly pleased with the performance of eBay since we added it to our Best Ideas portfolio. Recent data points indicate a continuation of fundamental strength at the company, and our $64 per share fair value estimate of the company suggests further upside. We continue to hold shares of the firm in the portfolio of our Best Ideas Newsletter.