The 3 things James Bond knows about Big Data

By Liz Hoffmann - September 26, 2012 | Tickers: EMC, GOOG, HPQ, IBM, ORCL, PG, TDC | 0 Comments

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I've watched all the James Bond movies and my favorite scenes always involve high-tech spy gadgets.  You probably have some favorites of your own, but I've always loved the Aston Martin DB5 and the Lotus Esprit that can function as a submarine.  I'd also give high marks to the Stun Gas Cigarette and the ski pole that doubles as a gun.  So what does all this have to do with Big Data?  Well, in sticking with the 007 theme, James is always given just enough information to be able to use these high-tech devices effectively.  And like Mr. Bond, I want to know just enough about Big Data to be able to use it if and when it's relevant, and to make money off it if and when I can.  Which begs the question, what would James Bond know about Big Data?

1.  At the present time, a conceptual understanding of Big Data will suffice.

Anything more is overwhelming for the private investor since the big data on Big Data is so daunting.  There are almost one billion articles on this nascent industry searchable via Google as of now, and that number's growing.  The term "Big Data" is amorphous by design to capture the fact that there exists an ever-increasing amount of data that is generated by you and me on a minute-by-minute basis.  Think Internet click streams, sensor data, log files, digital pictures, mobile data, and so-forth.  Take a look at this chart measuring Global Mobile Data alone:

Exabyte = 1 million terabytes. CAGR: Compound Annual Growth Rate. Source: Cisco VNI Mobile, 2011.

What's important to know is that while tons of this data is captured, stored and manipulated, where it is taking us or how to utilize it in general terms is not yet clear.  A McKinsey Global Institute study warns that those managers, companies, and countries who don't do this will be left behind.  However, the same McKinsey study offers no suggestions as to how to wrap your arms around and hug this phenomenon of information bigger than the Earth's circumference. And if McKinsey can't be more specific, how can your average investor?  That I'm not sure of but I do know that Mr. Bond wouldn't worry until it becomes actionable.  

 2.  Since average investors aren't yet able to leverage Big Data analytics for actionable investment purposes, for now look to invest in Big Data players.

For example, companies like IBM (NYSE: IBM), Oracle (NASDAQ: ORCL), EMC (NYSE: EMC), Hewlett-Packard (NYSE: HPQ) and Teradata (NYSE: TDC) are prominent in this space.  IBM has made a significant $100 million commitment to Big Data research, and thus far measures it on four basic metrics: Volume, Velocity, Variety, and Veracity.  It's the multi-dimensional nature of big data wherein lies the challenge and the opportunity.  (IBM is also one of Buffet's three largest holdings.)  EMC is another player with a programming model called MapReduce which computes large volumes of data in a parallel fashion, while HPQ acquired Vertica in 2011 for their e-commerce analysis.  Oracle and Teradata offer more of the warehousing of data, each of them with a different approach and ancillary offerings.  From an investment standpoint, all of these stocks with the exception of HPQ have returned between 14% to 50% (52 week) with regard to price growth.  And again, excluding HPQ, all firms have extremely bullish ratings and all have over 53% institutional ownership. I will do a specific stock analysis in a future post, but the James Bond takeaway for now is that you may want to consider investing in some of these Big Data purveyors.

 

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