By Chloe Lutts
What is Big Data?
Increasing Sales and Winning Elections
How to Invest in Big Data
"One of the most popular buzz words in corporate America over
the past two years." That's how
Small Cap Investor PRO
Editor Tyler Laundon described the concept of "Big Data" in the
But what exactly is "Big Data?"
Simply, Big Data is a concept and a buzzword coined to
describe the increasingly enormous data sets being analyzed by
businesses, governments and organizations today.
Today's "Big Data" sets are so large that they've been given a
new name to set them apart from the data that's been available in
the past. From a technical standpoint, the defining
characteristic of Big Data is that it requires new and
purpose-built tools to capture, store, search, share, analyze and
visualize that data. For example, commonly-used database
management tools like Microsoft Excel can be used to easily store
and use hundreds and even thousands of data points, but are too
slow to store and manage Big Data sets containing multiple
terabytes or petabytes of information.
An example from the sciences helps show just how much bigger
Big Data is. The Sloan Digital Sky Survey is an astronomical
survey begun by a New Mexico observatory in 2000. Collecting
about 200 GB of data on the cosmos per night, the Sloan survey
collected more data in its first few weeks of operation than had
previously been collected in the entire history of astronomy.
Businesses are collecting and using big data too.
saves data on all of its customer transactions-over one million
per hour-in databases now estimated to contain more than 2.5
petabytes of data. That's the equivalent of 167 times all the
information contained in the entire Library of Congress. (That
number comes from
, which explains how it compares books to bytes in
What use is that much data? It depends on how good your tools
are. No one person can look at 2.5 petabytes of data and discern
any sort of pattern from it. So software for organizing and
analyzing Big Data has become a big business. Organizations with
the right tools can use them to make big money... or win big
Right after the presidential election, the Obama campaign
shared some of its data strategy with Time Magazine. In
, the campaign explains how having the right tools to analyze the
data was key. The campaign took the various databases it had been
using for the 2008 election-with data from field workers,
fundraisers, consumer databases and social-media-and combined
them into one unified dataset. Once the data was all in one
place, the campaign could connect different types of
information-linking registered voters to their Facebook pages,
for instance-and run simulations of potential outcomes.
One senior campaign advisor told Time, "We could [predict]
people who were going to give online. We could model people who
were going to give through mail. We could model volunteers. ...
In the end, modeling became something way bigger for us in '12
than in '08 because it made our time more efficient."
So how can you invest in all this Big Data that's helping
Obama win elections and Wal-Mart make money?
There are actually a lot of options. One is to buy one of the
companies that have Big Data, like Wal-Mart or, even better, a
specialized data collector like
Acxiom Corp (
. Both collect consumer and commercial data, on- and off-line,
and sell or license it to users like the Obama campaign and
retailers. Equifax also offers its own products, like credit
scores and fraud detection.
You could also buy one of the companies storing all these
massive data sets, like
. Both have thousands of servers storing client data, and also
offer customers data analysis solutions.
But as I said earlier, the single most important determinant
of Big Data's usefulness is the tools you have to use it.
Generally, that means software.
Luckily for you, the latest
featured not one, but two, companies that make software for
analyzing and using Big Data. One is still too small to tell you
about here-if you'd like to know the company's name and story,
consider becoming a subscriber to the
. But the other is a little further along in its growth path, and
I can share part of the recommendation, from Ian Wyatt's
Top Stock Insights
"One of the biggest trends over the next few years will be the
collecting and utilizing of Big Data sets.
TIBCO Software, Inc. (TIBX)
does this better than anyone else in the business. ... Major
TIBCO clients include Yahoo, NASDAQ and Oracle-even the
statistics wonks at Major League Baseball use TIBCO to help
organize their database. With the timely intelligence TIBCO
brings, companies can maximize revenue, drive innovation, and
increase efficiency, thereby bringing costs down. ...
"What separates TIBCO from the rest of the herd is time.
Businesses receive real-time analysis from real-time data using
TIBCO software, whereas the competition uses data that may be
months old. This is TIBCO's biggest advantage.
"The company is also better equipped to offer clients
solutions based on data consumers provide on social networks.
TIBCO generates revenue by signing licenses with customers to
design middleware. Once a customer purchases TIBCO software, the
company charges service and maintenance fees. Though 60% of total
revenue comes from service, the licensing business segment has a
91% margin on new contracts.
"The company reported 134 new deals of over $100,000 during
the third quarter-up from 126 last year. What's more, the average
size of those deals rose-indicating strong customer demand-to
$676,000 compared to $658,000 in the same quarter last year. The
positive results in the third quarter didn't stop with the new
signings. The company also managed to increase their sales by 11%
to $255 million. Management reported EPS of $0.27, up 17.3% from
$0.23 a year ago (taking into account a $0.04 adjustment for
"Analysts expect TIBCO to generate $1.17 EPS in 2012 and $1.37
next year with sales expanding by 13.5% per year. Those estimates
equate to a P/E ratio of 21 for this year and 18 in 2013. Though
those ratios appear high, they aren't too out of whack
considering that TIBCO is growing its earnings at a 17% clip.
Moreover, the shares have typically traded with a P/E ratio above
40 over the past two years. ... We recommend buying the shares
below $29 and have a 12-month target of $32."-Ian Wyatt,
Top Stock Insights
A former dot-com darling, TIBX laid low for almost a decade
after the tech bust of 2000. Then in 2009 and 2010, the stock
started a second life, gracefully ascending 300% in two years.
But it then traded in a rocky range for all of 2011, and has so
far repeated the action this year, albeit at slightly higher
price levels. In a downtrend since September, TIBX is now
available near its lowest prices of this year. I can't say if
2013 will be the year this stock takes off again, but the
industry trends are certainly favorable and, based on the
available data my simple human brain can process, I like its
Wishing you success in your investing and beyond,
Dick Davis Dividend Digest