Posts tagged ‘magicjack’

Mar 17

Week 141: Portfolio Allocation

Portfolio Performance

See the end of the post for the current make up of my portfolio and the last four weeks of trades.

Recent Developments

I’ve been on vacation and so am a couple weeks late getting an update out.

My portfolio had a big move up, thanks mostly to the movement of Pacific Ethanol and MagicJack. Pacific Ethanol had a one day gain of 67% last Thursday, and is nearly a 4-bagger since I bought in. MagicJack is nearly a double.

But what has really helped is that even before the run-up Pacific Ethanol was my largest position. MagicJack was my fourth largest position.

One of the ironies of writing about the stocks I own, is that what I write about most is often not what I have the biggest position in. The stocks I have the most to say about are the one’s that are on the cusp, where I am constantly debating whether to hold on to them or not. My biggest positions; Pacific Ethanol, Yellow Media and MagicJack, for example, I have written only a single post about. That post states the thesis, and as long as that thesis is valid I don’t have much else to say.

Yet the stocks in my portfolio are far from being of equal weighting. I usually have a lot of stocks. Unless the market is going down, the stocks number at least 30 and has recently approached 40. But most of the positions are quite small, in the 1-2% range. These as starter positions; enough to keep me interested and following the company, but not enough to hurt me too much. If my thesis for these companies plays out, or if, as I learn more I become more comfortable with the idea, I add. If not, if the company materially lags or sometimes if time simply passes and I lose interest in the idea, I drop the position and move on. Read more

Nov 9

5 Comments

The other VoIP Play I added: magicJack (CALL)

While I was investigating Vonage I was introduced to their competitor magicJack by an acquaintance on twitter. Interestingly, in the process of talking me into magicJack he talked himself out of his own position. Let this serve as foreshadowing that this is not an investment without its warts.

The Positives

magicJack, like Vonage, provides voice over IP for telephone services for consumers. magicJack sells a little dongle like device that plugs into the USB port of your computer. You plug in the device, plug in your phone to the other end, and are off to the races. The company is best known for the incessent commercials they have pummeled at people for years. They also have a mobile app available on Android and the iPhone that allows you to make free long-distance and international calls as long as you are connected to Wifi.

magicJack has an enterprise value of about $250 million, comprised entirely of its market capitalization less $45 million of cash. In the first 6 months of the year the company generated a little over $21 million of cash, which puts the stock at an attractive 6x Enterprise Value to Free Cash Flow. If you step back to prior years, free cash flow generation as per the balance sheet was even stronger. The company has also been able to grow its customer base over the last few years, though this growth has tapered off some in the first half of 2013. A new device was launched in June that should provide a boost to growth, with the extent of that boost likely determining the stocks price in the short run. Read more

Oct 13

Week 119: Getting Back on Track

Portfolio Performance

See the end of the post for the current make up of my portfolio and the last four weeks of trades.

Recent Developments

I always write words like those in the title with some trepidation. I’m never really sure if things are back on track, or just bouncing on their way to oblivion.

Nevertheless, the tangible evidence is that my portfolio has recovered and made new highs in the last month. I had a blip to the downside in August, and when I look back on that blip, I can attribute it to a few bad decisions. There was Niko Resources, Walker and Dunlop and Dex Media obviously and to a lesser extent Vitran and AMBAC. All of these stocks had flaws that I should have recognized and gave greater consideration to, and none of these stocks deserved to be allocated outsized starter positions, yet in the case of Niko and Dex Media that is exactly what I did.

I’ve gone back to the drawing board since then. I’ve tried to be more careful with my stock selection, tried to spend more time thinking through each idea before adding a position, and tried to work with the attitude that an opportunity passed up is better than one taken and lost on. Read more