An Appreciation of Comverse
One of my new sources of ideas and opinions has been twitter. I’ve found a bunch of people on there who provide insights and from whom I have been able to learn and garner new investment ideas. While twitter has its drawbacks (for one it is difficult to hold a long conversation) it’s a great place full of investors, traders and fund managers that I would otherwise not have access to.
One fellow who I follow goes by the moniker @mojoris1977 and the name Jim Morrison. He has had a number of successful recommendations, but I hadn’t followed him into any of them until around the middle of December when he recommended a company called Comverse Inc. Shortly after the recommendation I bought a small position after just a little background diligence, but since then I have looked a more closely at the company and turned my position into a more significant one.
Having gotten the idea from someone who has proven to be quite astute, I approached my research from a somewhat different angle than I usually do. Rather than coming at it from the is-this-company-worth-looking-at-any-further angle I came at it from what’s-the-story-I’m-missing angle.
The Story
It wasn’t obvious at first glance. You take a look at the Comverse balance sheet and you see negative book value. You take a look at the income statement and you see barely break-even earnings. You take a look at the history and you see a prior accounting scandal related to the back dating of stock options and pre-spin-off financials that are mixed together with the holding company’s majority ownership in Verint. Add to that a somewhat hard to understand business, and an equally hard to understand (CEO (because of his French accent) and you have a whole bunch of reasons to stop looking. Read more
Reminiscences of a Stockblogger 