“Make a Fortune on ‘The Facebook Effect’: The New ‘Lord of the Cloud'”

By Travis Johnson, Stock Gumshoe, June 16, 2011

It’s been a little while since we dug into an Oxford Club promo, so this latest one that uses the eventual Facebook IPO as a hook caught my attention … in exchange for signing up for a membership in this particular club, they say you’ll “learn everything about making money from the ‘Facebook Effect.’”

No, they’re not actually trying to sell you Facebook shares — though plenty of folks will no doubt jump on that bandwagon when they go public, probably next year. The Oxford Club folks appear to believe, to shorten it a bit, that there will be a predictable mania from the Facebook IPO that makes other stocks go up, including some that they tease in this ad which have no substantial direct connection to Facebook.

So will one of these ideas be a better investment than waiting around for the Facebook IPO? I confess that I was tempted earlier this year to invest in the only real public access to Facebook shares (that being through Mail.ru, which owns a small slice of Facebook, as well as Groupon and Zynga shares) … but though it was looking good for a little while in late March, the price didn’t get down to my buy level before the Yandex IPO, and after the brief spurt of YNDX mania hit Mail.ru climbed and hasn’t looked back. Hasn’t even fallen down as much as YNDX did post-IPO, unfortunately.

Though now that you mention it, that’s a small validation of the larger scheme here — when a hot IPO increases attention in one smallish sector, the other stocks in the sector sometimes get a valuation bump-up.

I’ll go off on a quick aside: If you’re unfamiliar with the Mail.ru story, they’re listed at MAIL in London (though priced in dollars — there is a “grey sheets” ticker at MLRUY but I’ve never seen it traded) and their primary assets are the Mail.ru portal, which is kind of like Yahoo, some smaller social networks, a large chunk of VK.com (“Russia’s facebook”) and small chunks of venture capital investments in those silicon valley names I noted above, including facebook. If you value facebook at $100 billion and believe Groupon’s really worth $20 billion as they’re hoping, then Mail.ru’s holdings in each (2.38% of facebook, 5.13% of Groupon) could be worth roughly $3 billion, close to half of Mail.ru’s roughly $7 billion market cap. That’s what tempted me — I don’t know enough about the Russian businesses to value them appropriately, and clearly there’s reason for to price in a margin of safety for any Russian company even though they seem to be growing nicely, but I would probably have bought shares if Mail.ru dropped below $25 (roughly a $5 billion market cap).

But anyway, that’s not what we’re talking about with this Oxford Club “Facebook Effect” — in this case we’re told that we’re in the midst of a “new tech boom” … here’s how the pitch begins:

“All of Silicon Valley is texting, tweeting, gabbing and guffawing about it. Coffee shops are jammed with techies trying to work an angle on it.

“Last time I heard chatter even close to this was 1995 – the year Netscape soared 167% on its IPO and the analyst Steve Massocca called it “the beginning of fundamental changes on Wall Street.”

“Those were great times to be investing, and even greater that they lasted five long years.

“Yet when we look back on that Netscape IPO, and on the Google IPO a few years later, there’s something VERY important that most investors miss…

“Netscape and Google? They were the DiMaggio’s of the first tech boom. We knew their names, knew their stories. But what about the rest of the players?

“What about the other stocks that didn’t get all the press and the spotlight moments?

“Stocks like TheGlobe.com that rewarded early investors with actual 606% gains, and WebMethods which gave early and smart investors 508% gains, and Akamai Technologies which made early and smart investors rich enough for life.

“How Do You Book Gains of 508% and More on the New Tech Boom?

“These are the stocks that were in the game, making money for investors, but overshadowed. There’s a name for these tech stocks.

“We call them the ‘pacesetters.’

“They set the pace for the stock run-up in advance of a big-name IPO. And, they’ve often delivered far larger gains to investors.”

So what are these “pacesetters” that the Oxford Clubsters think are “practically required to move up” while the big-name IPOs get all the attention?

Today I’ll focus on sniffing out the first one for you, since they say that’s where their “excitement runs highest” …

“PACESETTER COMPANY #1:Throwing elbows with Amazon and Microsoft for control of the internet’s most lucrative sector, this little-known firm is slated to grow 300% by 2014. “

300% by 2014 sounds pretty good to me — so who is it? Never fear, we get a few more clues in this bit:

“PACESETTER #1: The New ‘Lord of the Clou