Who is “The IBM of the Commodities Industry?”

By Travis Johnson, Stock Gumshoe, September 13, 2012

Today we’re looking at a new pitch from Tyler Laundon, who is one of the analysts over a Ian Wyatt’s shop and who apparently is helming a pretty new newsletter called Pay Dirt that’s aiming to capitalize on the sometimes-rabid investor interest in commodities stocks. From what I can tell, he started publishing this one back in June and I haven’t seen his picks teased before … so let’s see what he’s got, shall we?

The ad, which came in today, got my attention because he says he’s recommending the “IBM of the Commodities Industry” — a company that supplies virtual picks and shovels for oil drillers, in particular, in the data that they need. “Big data” is a term that’s bandied about quite a bit, with the increasingly data-driven world in which we live, and there aren’t that many wildcatters out there who will go kick dirt around and smell the air and muck about with a dowsing stick to find the best spot to drill … in most cases, the huge cost of exploration means firms are investing in any data they can get that gives them a better chance of hitting, well, pay dirt. Sometimes that’s seismic data that they collect themselves or hire a supplier to collect, sometimes it’s historic maps or production data from 100 years ago … and apparently this company we’re being teased about is somehow involved in that data collection and dissemination. So that’s the short story.

Laundon in his longer sales pitch, by the way, also takes credit for some impressive picks — including Africa Oil at $1.85, which would mean that he was recommending stocks a year ago, perhaps not for this particular newsletter. He’s been a rising analyst at Wyatt for a while, so perhaps he picked it for one of the other Wyatt letters. That’s a good price, close to my personal average cost on those shares, and it means he probably bought it in mid-February, about six months after Christian DeHaemer started teasing it and I wrote about it and started buying, but before the first drill result that sparked its meteoric rise to $11. I still own my “let it ride” shares on that one, which makes it my largest common stock holding (if you include warrants, Sandstorm Gold is bigger for me) and I post notes on it on occasion here if you’re curious. So if he did indeed pick that one, kudos to him … shall we see if he’s got another winner?

Here’s how he teases it in today’s “free article/ad”:

“In the high-tech world, the top honor for data collection and dissemintation goes to International Business Machines (NYSE: IBM). Big Blue is trading near all-time highs just a few weeks before its 2012 Information On Demand annual conference.

“In the commodities industry, a much smaller information company has been growing since 1959, and is also trading near all-time highs for the same reasons that IBM continues to excel.

“Business demand for energy, transportation and economic data collection and analysis is at an all time high. Companies must efficiently make strategic decisions on natural resource-related topics, from capital spending to acquistions to government risk assessment….

“Right now I’m recommending this commodities consulting company to Pay Dirt subscribers.

“It is a different kind of commodity-related investment. It’s not a gold or silver miner, or an oil and gas driller. It’s not a shipping, freight or pipeline company. And it doesn’t build any equipment.

“It’s a technology company that provides mission critical information to companies engaged in all of the above activities, and more. This stock won’t rise and fall on the price movement of any one commodity, because it doesn’t sell any. Instead, it sells information. And customers are flocking to its products.

“As part of the company’s energy portfolio, it owns production information on more than 90% of the world’s oil and gas wells. If you’re a company that wants to drill for oil, you’re more than likely relying on at least some information from this company.”

So … not a huge amount of clues, but it’s a fairly unique business so the Thinkolator ought to be up to the challenge … let’s feed that data in to the “IBM of the Stock Sleuthing Industry” and wait