The first question is what will happen to the blog? I don't plan any changes for the blog, I will continue to post as I have in the past. My posting dropped off in the last week because I went skiing in Utah for a week.
Newsletter Vision
- A bi-monthly newsletter with a focus on 'oddball stocks'. This means stocks selling below book value, net-nets, strange unlisted stocks, and other companies that I find fascinating.
- Stock picks would be global in nature. Don't worry, I'm not going to fill the newsletter with all picks from Kazakhstan, or some crazy market. Everything will be purchasable, and I will verify that before profiling anything.
- Most, or all issues will include an exclusive article about a stock written by a guest asset manager. Note, if you manage a fund and would like to write up a stock please email me at oddballstocks [at] gmail [.] com
- As appropriate profiles and relevant data about attractive unlisted investments.
- A profile, or profiles of attractive bank investments. The profiled banks will include a sizable amount of data sourced from CompleteBankData.com.
- Other thoughts or musings on the markets or life in general.
- As appropriate other articles relevant to investors by guests. For example, if a spectrum engineer wanted to write a tutorial on wireless spectrum that might be included.
- Ideas presented in the newsletter would be exclusive to the newsletter, they will not appear on the blog.
- Subscription price would be $299 per year for six copies.
- The newsletter would be distributed digitally, unless enough subscribers wanted a printed copy. If you prefer print please email me or leave a comment on this post.
Does this sound like something you'd be interested in subscribing to? If so please sign up using the form below for more information.
Hi Nate!
ReplyDeleteI just have to say that I absolutely love your blog, I would like to subscribe how ever I'm poor, really poor. So seen from financial point of view, I can't subscribe to your news letter. I think this would be a good move for you, since you have dedicated readers unlike me. I've got like 0 readers:) I'm also a beginning investor.
You do good research, I think you will make it assuming you're going to continue with this blog!
-Rens
Thanks! We'll see what happens..
DeleteProbably unimagined good stuff, for the long term power of your blog and wealth:)
Delete-Rens
The idea is good but, as you know, it's all about value and pricing...
ReplyDelete$297 sounds better or $49 or $47 / letter is even better.
I would test the market with a pilot newsletter for half price.
A newsletter selling below book value.
I thought about this before I posted, I was thinking of doing $299. Then I thought, "who's going to fall for that?" What the heck, I'll change the post, $299 it is..
DeleteI'm testing the market with the email list. If I don't generate enough interest that way it's not worth my time actually creating a full newsletter, then selling it at half price and hoping more interest materializes.
The problem isn't $25, $49, or $250. It's what's called the dreaded penny gap. There are thousands of people who love to read my stuff for free. Getting them to place any monetary value on it at all is difficult. Getting someone over the hump of free/non-free is the biggest hurdle. I think $299 is a reasonable price, it's $50 per issue. For investments that could make investors thousands, tens of thousands, if not hundreds of thousands, it's cheap.
The truth is everyone who reads the blog is getting an incredible deal already. You're getting this for free, not paying a dime. I don't even have any ads on the site to support it. In terms of time and money this site is a losing venture, but I enjoy it so I'll keep it up.
I remember you once published a compilation of 20+ Japanese net-nets for $25ish. That seems more straightforward. Perhaps you should do 1 edition for community banks, 1 for global NCAV plays, 1 for US unlisted...so on.
ReplyDeleteAn even better way to gauge interest before you write a newsletter is to get people to actually subscribe to it today. People might think they're interested when they don't have to make the decision right now, but forcing them to pay $300 up front really separates those who are serious from those who are just 'interested.' You can always give refunds if you don't drum up enough interest.
ReplyDeleteNate, I haven't been a long time subscriber, but I have enjoyed your newsletter for the time I have been reading it. I know a bit about marketing and investing and would like to share my thoughts. Keep in mind, like writing and investment letter...this is only one man's opinion. A $299 price point is about the same as many older more established subscriber based newsletters/services. Their content and ratings may vary, but their longevity is based on relatively high circulation and tens or hundreds of thousands of dollars circulation marketing. The common thread is they tend to have a large volume of information which subscribers relate to "value". So I see two challenges you will have. One is the volume of content. Your response may be "it's not about volume, it's about content". Whereas I would agree if that is your position that content is far more important, it unfortunately is not the driver in getting paid subscribers. People pay for quality AND quantity...and getting anyone to put down money is always more of a challenge than you expect. The other issued is frequency of publication. Every two months (IMO) is too infrequent to keep subscribers over the long term. I strongly suggest that you consider the following:
ReplyDelete1- offer a charter subscription of say somewhere around $99-$149 per year. This price point will get you significantly more subscribers as a start up paid circulation investment letter. You can offer a "free" first edition as well. These "charter" subscribers would be on automatic renewal and the price would be guaranteed for three years. After then, you could gradually increase charters to reach your $299 full price. Any time after your initial charter offer, you should offer a second "charter" offer for $199 (protected and automatically renewed for three years). This will all be for the purpose of building a subscriber base. One year after your very first edition, I would no longer offer any charter subscriptions. I would simply offer straight renewable subscriptions for $299.
2- I would consider a monthly format... there is a way to do it without giving yourself twice the work. Publish a full issue every other month as you have planned, but in between publish a "review or update" where you would simply review any small changes or updated news about your recommendations or musings. It would be perceived as having much more value, and there would not be a two month communication gap (which is forever in publishing).
You can play with my numbers or thoughts, but I think you get the gist.
If I can be of any other help (if this helps at all!) please email me directly. Good luck!
I will subscribe at any price.
Great advice, I'd love to talk further. Unfortunately your email visible. Do you mind emailing me at oddballstocks@gmail.com? Thanks!
DeleteDon't you fear the stigma (the newsletter scene often looks like a graveyard of failed investors)? Besides it may be difficult to sell to a value crowd who tends to like bargains, successful newsletters tend to be targeted at more naive investors...
ReplyDeleteAnd while your blog is a pleasure to read and valuable, you're competing with a lot of other free -- and good -- blogs. A successful blogger largely gets paid in fame, glory, and possibly a bit of upside on their positions from people trading on their posts, and lots of people are competing for that sort of attention.
Why not jump direct to fund management if you want to leverage your investment skill beyond your own funds?
I've had this question asked a million times, might as well respond where it's searchable.
DeleteI've written a newsletter for a few years for GuruFocus, it's been fairly well received. I've been writing this blog for 3+ years, same sort of reception. I don't fear failure, a failed newsletter is a low lower risk than a failed asset manager. Yes, not all newsletters work, but not all blogs work, not all asset managers work either. A newsletter is a much easier side venture to run compared to running a few million dollars on the side.
As for working in asset management, I'm barred by my employer from running any money while I'm employed by them. I'm also married and have a family. To work for myself I would need enough AUM right out of the gate that would be hard to attract for someone who's never professionally managed money and doesn't have Ivy League connections. If you have $15m+ that you would like me to manage we can talk about this, I would leave my job for that.
Lastly in many ways I'd rather run a business than manage money. This is for two reasons. The first is I'm not convinced how I invest is that scalable beyond $10-20m. But secondly a business has a lot more favorable things going for it. Asset management relies on me and my skill alone. I can hire someone and try to train them to think like I do, but that's difficult. A company that sells a product doesn't have this problem. I can hire a management team to run the business for me while still retaining an economic interest. In many ways this is desirable, I can start on the next project while I hire an operator to run one that's doing well.
Nate:
ReplyDeleteI would be interesting in subscribing. I have no problem with paying for TRULY good/obscure ideas...
My thoughts are:
A). Every other month is simply not often enough. I would suggest at a minimum every month, or even twice a month.
B). I suggest maybe a lower price at first. If you can produce a first rate letter, then gradually raise the price. Only the most serious investors are going to be willing to pay $50 an issue...
C). Having guest submissions would be great. That is how I do all of my articles. I write from time to time, but don't have enough time/energy/willpower to run an independent blog. I do have enough time to write an article from time to time.
D). Do guest authors get free subscriptions or get paid in part?
E). General or specific musings are great. So are foreign stocks, or truly unusual situations...HOWEVER, I would argue that they should be the "spice" and not the main dish.
Whatever you decide, your blog is a mandatory read for me. Keep up the good work!
DTEJD1997,
DeleteGreat points. To answer yours questions. If I have to publish something once a month it's not going to happen. I can't handle that with my schedule, and I would end up publishing something I'm not proud of. I don't have the time to source and edit that many ideas once a month, especially since this is going to be side income for the foreseeable future. My main priority is my day job, then CompleteBankData.com, then the blog, and a few other obligations. I'm also married with kids, so there are a lot of moving parts..
The summary might not have been as clear as I would have liked it. The newsletter will contain a number of ideas per issue, most likely close to five or more. Some of them might be long and exhaustive, others might be a page or two highlighting a fairly unique company that's worth further research. I have the line up planned for a first issue, two unlisted companies most don't know that are very cheap, an idea that's almost truly unknown yet is extremely attractive and can handle a LOT of capital, two bank stocks, plus a guest post. A back of the envelope on my ideas is that you could probably deploy about $500k of capital to the first issue alone.
The price...yes, everyone wants something cheap, but you already have it! I'm already posting on the blog for free.
Not sure about the subscription for guests, hadn't thought about that, good points.
I presume you're a US reader. Half of my audience (at times more) is non-US based. So there is a balance, half of my portfolio is non-US as well. I think ideas will flow to where they're found. I have a good general sense from writing here what people want to read about.
Glad to have you as a reader!
I think my back of the envelope is wrong, I underestimated. I think you could probably get a few million into the trade I'm thinking about with a little patience.
DeleteNate:
DeleteThanks for addressing my points...
I think that every other month is a long time frame for a lot of people. "Out of sight, out of mind".
I certainly understand about being compressed for time. It takes me many, many hours to put together an article. I envy your proficiency!
Perhaps having "guest" or associate authors would relieve some of the stress in getting stuff out on time? You would certainly be the guiding force and main author, but have 2-3-4 guest authors contributing 35% of the articles might make it easier for you.
Every day I see more & more foreign companies listed OTC...especially mining companies. I've managed to get some truly obscure foreign companies this way. Of course, you pay a small hit buying OTC, but it is usually easier/cheaper than opening a foreign brokerage.
I wish you luck, and am anxious to see what you decide/do.
I'd be interested in lists of net-nets, both domestic and abroad, along with some financial data. I think you make a lot of Excels as you research; those are what I want :D Unlisted stocks too would be good too of the same type.
ReplyDeleteI think $300 for UnlistedStocks.net is a good deal, but I don't think I'd find enough net-nets in it to warrant only glancing at it a handful of times a year. $300 for bi-monthly issues to support your content is $25 a month. I think the content you provide is worth treating you to one cheapo meal a month :)
I'll subscribe. I assume PayPal will be a payment option?
ReplyDeleteMonetizing a value investing site like this is tough and I think everyone here can understand that. Ad revenue simply can't reflect the value you offer to readers. So, a subscription service of some kind makes sense.
Personally, I think bi-monthly is fine. Especially now that good ideas are becoming more difficult to find. I'm not looking for "quantity" at all.
Paul,
DeleteThanks for the comments, yes monetizing a site like this is difficult. My goal is to provide a premium version of what I already do. Most bloggers use their blog as a platform to get a job as an investment analyst, or to start a fund. Neither of those are goals of mine, so I'm exploring different avenues.
I want to provide both quality and quantity if possible. I think in a bi-monthly format this is possible, otherwise I'd end up watering down some of the issues. I agree that good ideas are becoming scarce!
Nate
Nate, this is off-topic, but since you mentioned international stocks, you should take a look at Keck Seng Investments - 184 HK on Hong Kong Stock exchange.
ReplyDeleteIt has 5 HKD per share in cash, US real estate worth ~ 6 HKD per share, and other real estate assets worldwide. I calculate NAV = 19 HKD per share, while the stock is at 5.8 HKD per share. Full disclosure, the stock represents a 5% position in my portfolio.
Mike
(1) I read your blog and have a level of comfort with your ability to locate valuable obscurities. I suspect most here know that there is significant value in what you do for free. Firstly I'd like to express my appreciation for what you’ve done, and secondly I offer the following;
ReplyDelete(2) Utility - As a tiny (and admittedly insular) US investor, a fraction of your ideas simply don’t submit to my analytical abilities. If I can't read the annuals because they are in French or something, then they go into the "technically intractable" pile (bin). I recognize that this is part of what creates the opportunity, but obscurity being your selling point, a portion of your ideas will naturally be "too oddball" for a meaningful (and very likely different/rotating, depending on context) cohort of your readers. To half-seriously illustrate, if I paid $300 a year to get a list of 30 ideas that were all in African and Indonesian construction & livery companies I would very likely just cancel. Surely there is a happy balance, but the nature of paying for ideas is that if you don't give me anything that I can personally use (my deep faults taken into account) – I just stop paying. You have a good balance on your blog, but as a deeply skeptical buyer it occurs to me that I'm prospectively paying premium pricing (see #4) for 100% of a newsletter of which I can personally use maybe 30-50%.
(3) Capacity - your ideas basically by definition can absorb limited capital. You've said that you couldn't manage more than $15-20mm. As a prospective buyer I start estimating: supposing 200 subscribers with $100,000 each, on which they will be paying you (200x$300=) ~$60K. A good result for you, and to make a comparison mathematically you're at a sort of 30bps "virtual management fee." Something like 50bps is the most I would ever even briefly consider parting with for passive advice of which I can in any given year use 30-50% by quantity (see #2). So the pricing isn’t truly horrific (but, see #4). My issue is that I'm slower to read/absorb/act than your other subscribers (see the reaction any time you post on SA Pro...).
Given that there would be 199 people out there having leapt the penny gap to put ~30-50bp worth of skin in the "Oddball Newsletter" game, I imagine they will be strongly motivated (if not impulse-driven) to cram capital into these (as defined) obscure ideas. Cynically, you're personally likely to do quite well as a long with an influx of buyers in a thin market, but from where I sit it seems like it might render your advice valueless to me (like paying a 30-50bps entry fee to a footrace that I am very unlikely to win). There is obviously unaccounted-for overlap (or non-overlap) here with #2.
(4) Frankly, the pricing just looks high - both as a portion of my personal assets and as an absolute figure. Having not seen a sample issue it's hard to make a good comparison (maybe a consideration for testing the market further?). Objectively though, on an issue basis you are 25% over long-established reputable guys like Grant's. On the "value" front you are at 75% of the price of a year of OID (although I - and I think many others - are unclear on exactly how that works currently). I would be much more likely to subscribe on a "Charter" basis as outlined by an Anonymous commenter above, if only because $100-$150 is a much smaller risk while the value proposition is relatively unclear (especially as it relates to #2 / #3).
As a potential subscriber, these are the hurdles I would have to mentally clear before pulling the trigger on the Oddball Newsletter. To reiterate, these aren't criticisms on you personally - I very much appreciate all the value you’ve provided free of charge and will be among the first to happily sign up for something like this if it makes sense.
Thanks for taking the time to offer your ideas, I appreciate reading and thinking through this.
DeleteSome of the comments on pricing are funny. Do you expect to get a price break on a hedge fund because the manager isn't as 'seasoned?' I see Grants is about $50 an issue. The problem is while people might love to subscribe for $50 or $100 a year it simply isn't worth my time given the interest level. I doubt 3x or 6x the people would subscribe at a lower price point. I just don't have the bandwidth to product a really great product for a few grand a year.
Yes, the US ideas, seems to be an issue with US investors for sure. Non-US investors don't seem to be bothered by non-US ideas. But I'm clearly sensitive to this as well. I would prefer to invest in US companies because it's cheaper for myself when considering commissions.
In many ways Americans seem to prefer lower quality American ideas verses higher quality foreign ideas. I'm not sure why this is the case, but it does offer opportunity for the enterprising investor.
The question I'd ask is what percentage of the ideas in a newsletter do you plan on investing in? I view something like this as providing an investor with 20-30 ideas a year for $300. I would expect a typical reader to invest in maybe five ideas, possibly 10 at the most. If you're putting $10k worth of capital into any of these that's $50-100k into this for a year. In terms of fees that .6% to .3%. I mean yes everyone loves paying less, but that's already fairly inexpensive as it is.
I'm split on how to test this further. A charter issue is an interesting idea. The problem is there is a lot of up front cost for me to put something like this together. I'm not talking about the newsletter itself, the sales platform, the credit card processing, book keeping etc. I have some of this infrastructure build for CompleteBankData.com, but I'm looking at maybe 60-80 hours of programming to get just a charter issue setup.
I've received enough interest via email signups to take this a step further. The next step is to have people actually sign up. If conversions fail at this point I can just initiate refunds and call it a day. I might have to eat a giant CC processing fee, so not totally costless for me.
I guess a last option is a hybrid approach. Maybe let people sign up for a subscription at full price, or pay for one issue at $75 and see where that goes. If someone wants to sign up after that they can.
Everyone loves free. I'm realizing why freemium business models don't work. Of the readers to my blog monthly about 1% have expressed interest in subscribing. Take that as you will (either I have a lot of traffic, or little interest). That is about the normal conversion rate for a freemium model. It's a double edged sword. A large base gives me a platform to do something like this. At the same time I'm giving away a lot to many people for nothing in return. I can see why some newsletter writers don't publish anything publicly, it's easier to cater to a small and loyal audience.
I should also note that this is clearly a discussion of value proposition. Most readers don't see the value in what I write, I understand that clearly. I long ago realized that most readers are entertained by the blog, and are not necessarily looking for investment ideas. The proportion that are looking for ideas is very small. Maybe a similar number to the number the expressed interest in a newsletter.
DeleteThere's nothing wrong with reading me for entertainment. I truly hope readers are entertained, that's one of my biggest goals. I want my writing to be enjoyable to read, even if an investment isn't appealing, there is no shame in that.
Don't you have to be a registered investment advisor in order to run a paid investment newsletter?
ReplyDeleteI am an avid follower of yours.
Best
No, in the US you don't need to be a RIA to publish an investment newsletter. There is a carveout in the regulations.
DeleteThanks.
Hey Nate, have you looked at Bozzuto's "BOZZ"? It looks screamingly cheap, with only 527,251 shares outstanding, they earned $5,855,026 and have shareholder equity of $36,781,911. In addition, they have a LIFO reserve of $28,158,000. Seems like HUGE amount of value for profitable company in recession-resistant business. They have also grown their business significantly recently. Their last annual IS and BS are online at investors hub: http://investorshub.advfn.com/Bozzutos-Inc-BOZZ-28044/ but I can send you complete annual if you'd like. Thanks!
DeleteLooks like value investors are an extraordinarily tight bunch. I guess it goes with the territory, but after reading posts on Corner of BRK & FFH, I get a vibe that most people just pay lip service to the methodology in both their portfolio and personal lives.
ReplyDeleteThe fact of the matter is that Nate is pretty much the only deep value Graham & Dodd style investor out there who actively updates his blog and shares his ideas and thoughts on net-nets, ultra-low PB, unlisted stocks, etc., and he does this for not only domestic stocks, but international stocks as well.
The only other author who did this with the same sort of breadth and philosophical inquiry was Geoff Gannon, and it unfortunately looks like he's pretty much had to abandon that due to lack of opportunities in the market as well as interest from paying readers. His net-net and ultra low P/B pieces were some of the best ever written on the subject, but it now looks like he is trying to get a $100 a month newsletter of a long-term value hedgehog style up and running.
If you have less than $10M, listening to Nate can make you rich. $300 is nothing to support this information. You're paying more for an accountant, doctor, or lawyer to just Google your problems when you aren't around. If you can afford to buy at least 5 foo-foo drinks at Starbucks a month, you can afford this :P
Thank you for the kind words!
DeleteI would love to subscribe, but would have a hard time selling my wife on another 300 of information expenses. 3 payments a year of 99 each and I'm in. Or the charter deal outlined above and
ReplyDeleteInstead of a newsletter, have you considered turning this blog into a paid community. Charge $10-$20/month, add a message board, put up some ads on the site, add some general research articles, etc. I don't know if it'd be more or less work than publishing a newsletter, but I think your subscriber based would be a lot broader. Personally speaking, I'd be much more likely to pay $20/month than I would $300 without knowing what I'm getting.
ReplyDeleteDo that for a year or two, see how it goes, and then turn it into a newsletter if you so desire. I've had a couple of ideas for investment type sites, but my programming skills are non-existent, so I've done nothing with them.
Thanks for the ideas, they're interesting. This might sound weird, but I actually don't care if I have something with broad appeal. There is a certain subset of readers who appreciate what I want to publish, and would specifically seek it out. Most others don't, and that's alright.
DeleteAs a friend said, I'm not writing a WSJ type of a thing with a broad appeal for $1.50. This is very specific and focused. We all need to eat, and some people enjoy nice dinners while others are satisfied with Chicken McNuggets. I don't need to worry about the McNugget crowd, I'm already satisfying them with free content. But I do want to provide something for the nice dinner crowd.
For anyone who is potentially on the fence about this I believe my approach is going to be this. I'm going to offer a first issue as a standalone for $75, or the full subscription. If you decide to subscribe after buying the first issue it'll be at $225.
I should have more on this in a few days.
i would be interested. My only concern is that many of your ideas are highly illiquid. Other than that, i'm in. atryan23 at gmail.com
ReplyDeleteNate:
ReplyDeleteI would encourage you to do whatever your gut tells you to do. You operate in a niche of a niche (oddball stocks in microcap space mostly) and you know that. The question is always, is it worth your time to charge. Not necessarily the time to create the content because you do that anyway, but the time it will take to deal with the good and bad aspects of having subscribers.
I know I would love to see you manage money. In todays world with RIA structures, you could get licensed, and fully set up on Interactive Brokers etc for less than $10k in setup fees (attorney etc). You leverage your blog by way of it being a means of market yourself. Not everyone that reads your blog is a "poor" deep value investor. I'm sure you have some very very wealthy investors too that could just as easily give you $10k-$50k-$100k+ to invest. It lets you continue to do what you do, build a track record of performance, and gives you a reason to produce really good content (by way of marketing yourself).
Ian Cassel
I think Nate may have commented on this earlier on Corner o' BRK&FFH, but the effort in managing something like this wouldn't necessarily equal a good dollar return.
DeleteI really hope that I'm incorrect, but as far as I can tell, if he can get a group of qualified investors up, great; he can charge the 20% performance management fee he deserves. However, if he just gets some accredited investors brown-bagging a paltry less than $1.5M in net worth, then he can only charge a 2% management fee.
Raise $1M, possibly get paid $20k and then be subject to all sorts of scrutiny and weak hands wanting to take their money out.
Nate, I am in and excited to receive the first issue!
ReplyDeleteI hope the newsletter will be released electronically as I am overseas.
I understand the issues with pricing. To a large degree but not exclusively this is related to portfolio size. I need to put $50K or more into an idea so if I can find a stock every few years from your newsletter that doubles then even at $999. per year subscription price is very, very cheap for me. I place a lot of value on your ideas and research and am willing to pay for this.
I hope there will be a few ideas that have some type of liquidity, but I understand that not every idea fits every investor and portfolio size.
I like the idea that subscribers would have access to some of the ideas in the newsletter before they would appear in the free blog. This is something worth paying for. I think over time this would push some cheapskates or fence sitters who are used to getting your work for free on the blog to pay up to get real time information.
You have a very high quality value investing blog, and lots of people have already made money from your ideas (for free). You and the blog are now a proven product/commodity. You should be paid well for this. Please give the newsletter a try. I think that the number of subscribers will grow over time. And if it starts to get too big you can always raise the price.
I am reading Martin Zweigs book now. He got his start all from writing letters to the editor of Barrons to get his name out there. He was just a teacher at the time. A few subscribers to barrons saw his letters to the editor and wrote him letters asking him if he had a newsletter that they could subscribe to. His newsletter and buniness took off from there.............. Good luck with this!
Roger R.