Searching for the Voice of the Internet

While writing for Seeking Alpha, the main sector I have concentrated on is New Media, and the star of that series has been Modavox Inc. (MDVX.OB) currently trading at $1.78 per share. Even though most of my writing in other publications focuses on Technology, Consumer Products and Life Sciences it was high time for a fresh entry on New Media using my microcap barometer.

Just over two years ago, I began researching and writing on Modavox because they were a company in transition with a new and talented management team, and I was an Editor in the New Media sector who could speak to the audience from an investment perspective (Modavox at the time was trading around 30 cents per share). As I was trying to articulate what was happening in the New Media niche, the volatile and unpredictable waters of the microcap seas kept capsizing my vessel of truth, even though Modavox was a very accessible microcap company. Most don't know that of the 8,000 OTCBB and Pink Sheet companies only a small percentage have a fighting chance of succeeding.

Those are terrible odds so the work is tricky, and many times I have been tricked. Rewards come from watching a company blossom while its share price and concurrently its market cap escalate until someone with a big enough pocketbook takes notice and writes a check. That is the story for many Microcap companies in its timeless and unrewarding nature. In this case the expansion in market cap over 24 months is indicative of the direction of the media niche and why "The New Media sector" will be the top performer in 2008.

Over the weekend I read a comprehensive, report on Modavox and its current direction, but it is really a continuing story about the state of New Media where this tiny company acts as a weather vane/barometer giving clues to what is happening for all players in the space. Make no mistake why NewsCorp, Google, AOL and Microsoft are all bidding for Yahoo. These same metrics apply down the line and I was lucky enough to recognize a company in the space I cover.

Now, let me walk you through the occurring similarities and the single component that bridges these Mega Caps with this Micro Cap. The single component is Behavioral Targeted Ad's ("BTA"), which is a product of the Internet evolving. Most investors do not recognize that historically, disruptive technology like air travel, radio and TV had drastic impacts on culture and therefore business. Even fewer take notice that the Internet will have a greater impact than all previous disruptive technologies combined. BTAs are the natural outgrowth of this transition. Metrics are called UVMs or Unique Visitor Metrics and determine a way for predator companies to calculate the value of their acquisitions. Google relied on this during its purchase of YouTube, and NewsCorp had this to credit for the internal fights when they bought MySpace.

Although I received a copy of this research report from a fund manager associate, you can probably contact W.A.B. Capital and get a copy yourself. Ironically, I recognized one of the authors, Senior Equity Analyst Shelly Meyers from my past money management days. Just one Google search will tell you a great deal about her including one of her large cap value funds being ranked the number one performing fund by Morningstar a few years back. I think they've hit the nail square on head with their assessment of Modavox. It's a good read whether investing in this company or just the space itself.

Again looking forward, I expect Modavox to achieve at minimum, the same growth rate it has over the last 2 years, increasing six fold from 30 cents to $1.78 in 24 months. This assumes they choose not to sell out as the space continues to consolidate. I find it hard to believe they will not soon get an offer that is too hard to pass up, but for now, New Media is a misunderstood space and continues to trade at a deep discount to its valuation.

It's great to see others noticing what I have observed over the past two years. This is the one percent reward you get as a writer, other than sending perfectly edited emails. I have never received compensation for any company covered in my career. I am a retired microcap portfolio manager watching this niche continue to develop.

Disclosure: None

Comments

[Terry S]

He was right originally and I'll bet he's right now. Being in the industry itself, this company is raising more than a few eyebrows. Good article!

[Snoopy1]

Wow. The report says they could be worth over $50/share.

[Crumslip]

Forget everything you read about MDVX. Dont listen to anyone telling you its worth $50 a share. Everyone here is doing favors for one another in promoting it. What MDVX does have is a patent suit. You are investing in them winning it, do not be fooled by anything else.

[stonedinvestor]

Where does Adstar ADST fit into this new media? I took a bath on that one which had similar goals to Modavox. I'd be interested in your microcap view of ADST as well. ~ stoney