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Many readers may not realize this, but back in the day, hedge fund manager Whitney Tilson was a regular columnist for The Motley Fool. He penned one of my all-time favorite Fool articles, "The Scuttlebutt Advantage." In it, he talked about how he went about obtaining information on a company via nontraditional means.
After reading the article, I was motivated to go out there and find my own edge. Below, I'll show you my own scuttlebutt that I've gathered on seven companies.
By no means are the "secrets" I'm about to share exhaustive, nor should you view them in isolation. Instead, they represent data points that you can constantly monitor, and which don't usually show up on the quarterly earnings reports.
Ancestry.com (Nasdaq: ACOM )
The popular genealogy website went public back in November 2009; since then, shares have risen more than 180% from their first-day close. I like to keep an eye on page visits by going to Web traffic site alexa.com. By doing this, I figure out who is using Ancestry's website (hint: women over 45); I know that as of this afternoon, it was the 303rd most popular site in America; and I can keep tabs on international growth.
Rackspace Hosting (NYSE: RAX )
Hosting and cloud servicing can be a brutally competitive business. Rackspace's edge lies in offering Fanatical Support (a term it has trademarked) to its customers.
When customer service is the crux of one's advantage, I think it's vitally important that employees are happy. I can check up on Rackspace by visiting glassdoor.com, a website that gives an insider's perspective on companies. By digging a little, I see that although the long-term average employee rating is 3.6 out of 5, the average employee this year has given the company a satisfaction rating of 4.2.
Netflix (Nasdaq: NFLX )
I have two metrics I like to keep an eye on for this streaming movie provider. The first is the percentage of peak downstream traffic accounted for by Netflix's 23 million subscribers. Sandvine, which accumulates the information, says that Netflix now accounts for nearly 30% of all peak downstream traffic in North America.
The second source I use is Compete's site analytics. The company is able to tell me how many unique visitors Netflix has had over the past 12 months -- in this case, more than 33 million.
National Oilwell Varco (NYSE: NOV )
Contrary to what the name might lead you to believe, National Oilwell Varco doesn't actually drill for oil. Instead, it's a one-stop shop for anyone looking for tools to extract the black gold.
On a very old podcast of Motley Fool Money, Inside Value advisor Joe Magyer recommended that listeners keep an eye on oil demand by visiting the Energy Information Administration's website. By scrolling all the way to the bottom of the page and doing a little math, I see that demand for oil is down 2% over the same time last year -- not the best sign for the company.
Travelzoo (Nasdaq: TZOO )
I've written extensively on how most people don't realize that Travelzoo's really a two-headed beast. It offers travel deals that aren't available anywhere else, and it's also entering the deals market currently dominated by Groupon and LivingSocial.
Because I think its "Local Deals" segment is its key for future growth, I'm regularly checking how that section's doing on the company's website. Specifically, I want to make sure that there are at least two high-quality deals (a sticker price of more than $100) listed, and that at least 750 people in Travelzoo's 10 biggest markets have bought those deals. When I last looked, four of the cities have at least two such deals, three cities only have one such deal, and three have no such deals.
Whole Foods (Nasdaq: WFM )
I'm a huge fan of Whole Foods. I keep my eye on two simple metrics. First, I compare my grocery bill for a few organic staples (berries, vegetables, milk, and eggs) at Whole Foods versus the organic offerings of rivals. Currently, Whole Foods has a convincing advantage on cost. Next, I also visit its stores and those of its competitors regularly, since I think a premium shopping experience plays a huge role in building customer loyalty.
PriceSmart (Nasdaq: PSMT )
Here's the quickest and easiest way to explain this company: It's the Costco of Central America. My fiancee and I spent the better part of the past six months in Costa Rica. While there, we realized two things: Lots of U.S. citizens are retiring to Central America, and while they're there, they visit PriceSmart for most of their shopping needs.
I believe that the exodus of retirees is a trend that will continue for some time. For PriceSmart, I head back to alexa.com to tell me how many people are at least visiting the website. Here, I can see that the site is listed as the 419th most popular in Costa Rica (their largest market), 616th in Panama (second largest), and 426th in Trinidad and Tobago (third largest).
As I said before, none of these metrics should be your sole sources of consultation before making investment decisions. But since most of Wall Street (and, these days, Main Street) is checking quarterly reports for information, looking under a few rocks here and there can help give us little guys an edge over everyone else.
If you want to be alerted when I publish my findings on these companies, add them to your watchlist: