The Long Case For Omniture


I like the potential growth story with Omniture (OMTR). OMTR provides online business optimization software, and continues to win lucrative contracts. I am also interested in OMTR because it is one of those little stocks that is often quickly reviewed and then tossed aside because it doesn't look that great on paper (Net Income has been abysmal).

However, I think accelerating revenue growth is a more important metric in this case as OMTR is relatively newer in its lifecycle. Plus, the entire industry has been very hot. For example, DoubleClick was acquired by Google, aQuantitative was acquired by Microsoft, and ValueClick's price jumps every time a new buyout rumor surfaces.

Another thing I like about OMTR is that it diversifies the investment strategy within my portfolio. The majority of the names in my portfolio have passed an initial screen based on multi-factor screening model. The problem with the model is that every once in a while it can fail.

For example, my screening model uses many of the same general screening factors as many of the big quant funds, and when quant funds are forced to liquidate (like they were last August due to the credit crunch) my portfolio takes a hit.

More specifically, Goldman Sachs Global Alpha fund screens on book-to-market, small market cap, and T-12 to T-1 price momentum (at least this is what I'm told by people close to the fund), and LSV's $80 billion AUM is selected largely on book-to-market, small market cap, and recent share repurchases, and since I screen on many of these factors I can take a hit if and when those big boys are forced to liquidate large portions of their holdings.

Anyway, I'm up about 6% since I bought OMTR, and I like the potential for a lot more growth.

Disclosure: Long OMTR

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