educatedidiot Posted March 7, 2013 Share Posted March 7, 2013 I think IDT is pretty cheap and should easily be worth at least $20 per share. Does anyone here follow the company? I'd be interested in a discussion if anyone has thoughts on it. I wrote up why I like the company on my blog, which unfortunately has been suffering from gross neglect. You can read it here: http://marketbeating.com/2013/03/07/idt-corp-is-misunderstood-and-cheap-idt/ Link to comment Share on other sites More sharing options...
augustabound Posted March 7, 2013 Share Posted March 7, 2013 I think you win the contest for best user name. ;) Link to comment Share on other sites More sharing options...
educatedidiot Posted March 7, 2013 Author Share Posted March 7, 2013 Thanks, it's from a song that I like, and I think it speaks to one of the more important principles in investing: "I'm an educated idiot/I'm smart enough to know I don't know" Link to comment Share on other sites More sharing options...
siddharth18 Posted March 8, 2013 Share Posted March 8, 2013 No opinion on IDT at the moment, but I love your username and your blog. Thanks for posting! Reading thesis now... Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted March 8, 2013 Share Posted March 8, 2013 Last quarter IDT granted Howard Jonas 10% of the equity in ICTI, and in this transaction they valued ICTI at $12 M. 1- Is this shady? It looks shady to me. Why is Howard Jonas getting a sweetheart deal?!?! There is value in ICTI because they are going to turn into patent trolls. Stock-Based Compensation On September 24, 2012, the Company’s Board of Directors approved a grant of 10% of the equity of the Company’s subsidiary, Innovative Communications Technologies, Inc. (“ICTI”) to Howard Jonas. These ICTI shares vested immediately. The Company recorded stock-based compensation expense of $1.2 million in the three months ended October 31, 2012 for the grant of these shares, based on the estimated fair value of the shares on the grant date. 2- I've read Howard Jonas' book. It seems like he works hard and is good at making money at random things. He used to run a hot dog stand, got into audio tours for tourists and brochures, engaged in questionable direct-to-consumer sales (he'd advertise products like personalized horoscopes and sell them direct; some of his other schemes got him into trouble). I'm not sure if he is a "mensch". See #1. It doesn't add up?? 2b- John Malone used to be a fan of his, but later parted ways. Malone swapped out of IDT a long time ago. IMO, Malone is smarter than Jonas. 3- In terms of insider behaviour, GNE looks more interesting. But I never understood experimental shale oil technology and it looks like MCF is a better bet on oil/gas. Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted March 8, 2013 Share Posted March 8, 2013 Though to be honest, I bought IDT when it was $2/3 and quickly flipped it after I got my CTMMA/CTMMB shares. I never understood it at the time and totally missed the boat. Then I played share arbitrage on IDT C/IDT and got killed (ultimately that trade would've worked out but I exited the trade early at a loss). Link to comment Share on other sites More sharing options...
educatedidiot Posted March 8, 2013 Author Share Posted March 8, 2013 I don't think the ICTI share grant is "shady" at all. It's just another form of compensation. Bear in mind that Howard has paid himself a $35k base salary for the past three years. I mean I'd rather he granted himself a smaller piece of the business, but I see nothing wrong with taking compensation in this form. It does, however, provide some very good signalling value as to what ICTI is worth. Of all the ways he could be paid, he specifically wanted ICTI stock. As I said in the report, I'm guessing that IDT's stake in ICTI will turn out to be a lot more valuable than the $10 M I've assumed. As for his honesty in business, I don't have any concerns here either. For anyone that has researched the international calling card market, you will no doubt learn about all sorts of dubious practices that have occurred. But you will also learn that IDT stands out in the industry for having clean, honest cards. Howard now has a long track record in the public markets with which to judge him, and I think it reflects well on him. Thanks for mentioning the book, I should have provided a link to it. For those interested, it's available for download here: http://milo.digitalentropy.com/projects/onaroll/onaroll.pdf Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted March 8, 2013 Share Posted March 8, 2013 His interests would be better aligned with shareholders if he received compensation linked to how well IDT is doing... not one specific piece of IDT. I would make an exception if he was some sort of VP who is heavily involved in the operations of ICTI. This does not seem to be the case as Howard Jonas is not a lawyer or specialist in the legal field. Link to comment Share on other sites More sharing options...
educatedidiot Posted March 9, 2013 Author Share Posted March 9, 2013 Howard Jonas owns 21% of the company. Of all the concerns that might exist, I certainly don't think management alignment of interests is one of them. Also, he has in fact been very involved with ICTI, that was part of the justification for the stock grant. Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted March 9, 2013 Share Posted March 9, 2013 When he gets paid, his interest is 100% versus than his 21% ownership of the company. There are some companies out there where the CEO has questionable ethics despite high insider ownership. e.g. some Chinese reverse mergers turned out to be total frauds despite/regardless of high insider ownership. Not that Howard Jonas is in the same category as the Chinese reverse mergers out there. I would rate him as lower in integrity than John Malone and better than a lot of CEOs out there. I'm just saying that the deal looks very fishy. I don't see a legitimate reason why his compensation is structured that way. Of course, I haven't done much research on IDT and I don't know his level of involvement with ICTI. Link to comment Share on other sites More sharing options...
educatedidiot Posted March 10, 2013 Author Share Posted March 10, 2013 Obviously having high insider ownership says nothing about whether someone is ethical. The only reason why I mentioned his 21% ownership was because you specifically said that "his interests would be better aligned with shareholders if he received compensation linked to how well IDT is doing." If he already owns 21% of the company, as a shareholder I have no concerns about his interests being aligned with my own. As for whether he is more or less ethical than John Malone, does it really matter? I mean John Malone is just one person, and while I think Malone is also a very sharp guy, it's not like he's some sort of model of ethical behaviour. I don't know how familiar you are with the history of TCI, but in the early 90s Malone pretty much tried to steal the company through a purposely complicated rights offering. I mean if we're keeping score I think I'd put Malone one notch below Jonas on the ethics scale, but like I said I don't think the relative comparison matters anyways. As for why his compensation is structured this way, Jonas has been receiving stock compensation ever since he voluntarily stopped taking a base salary. I wish every company I owned would pay its managers entirely in stock in lieu of cash. Voluntarily asking to not receive a salary isn't the sort of thing that an unethical CEO does; those types like to have their cake and eat it too. Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted March 10, 2013 Share Posted March 10, 2013 If ICTI does well and the rest of IDT does poorly, then Jonas will do better than shareholders. A more sensible compensation arrangement would be to give him equity or options in IDT, not ICTI. The other problem is that Jonas owns more of ICTI than IDT. If there are conflicts between ICTI and IDT, then Jonas may abuse his control of IDT such that ICTI benefits more than IDT. Ideally, you want to avoid that situation if there isn't a benefit to creating that situation in the first place. 2- John Malone and Liberty are worth looking at because there is some somewhat questionable stuff going on. Yeah he made the rights offering insanely complicated and suckered "sophisticated" institutional investors into undervaluing TCI rights and shares. But they weren't forced into a dumb decision- they made it on their own. 2b- The other thing worth looking at is Malone's love affair with tracking stocks. There are definitely conflicts of interest between the tracking stocks. Usually one tracking stock is the "complicated" part and the other trackers are much simpler. (Though the simple parts are still complex as they are liable for the other trackers' debt.) Debt was swapped into Liberty Capital when the Capital/Interactive trackers were formed. When a hard spin-off was performed, Capital and Interactive made a deal where the debt was swapped between the two trackers such that Interactive ended up with debt. These deals are extremely tricky between Malone's interests aren't always aligned with shareholders. So far it has worked out ok as shareholders and Malone have made a lot of money together. With the AT&T and Liberty trackers, they ended up suing each other over a tax agreement. The conflicts of interest there had a small cost to them as legal battles do cost money. 3- Again, this just goes back to the ICTI deal with Jonas not making sense. Malone's trackers allow Liberty to arbitrage discrepancies in stock prices. Expensive trackers use their stock to buy out undervalued companies. Undervalued trackers buy back their stock. I don't see the value in the ICTI deal. It unnecessarily destroys a small amount of value... just so Howard Jonas can make his compensation seem less than what it actually is. I don't agree with that. Link to comment Share on other sites More sharing options...
educatedidiot Posted March 10, 2013 Author Share Posted March 10, 2013 He owns marginally more of a subsidiary that is probably worth 2% of what his massive stake in IDT is worth. This does not present agency risk. If the subsidiary was significant in value relative to IDT it would be a different story, but it's not. Virtually every company in the US has more agency risk by virtue of their CEO drawing a salary. I just think your concern of agency risk here is hugely misplaced. Howard Jonas' interests could hardly be more aligned with shareholders, and the minor ICTI stock grant does nothing to change that. In terms of the stock grant "destroying value", it's compensation, obviously it has a cost to the company by definition. Would I prefer that he worked for free AND refused all other forms of compensation as well? Sure. That's clearly not a realistic expectation though. As for Malone, I'd say that intentionally designing an "insanely complicated" rights offering that "suckered" investors into transferring a huge amount of value to himself personally is pretty much the definition of highly unethical behavior. Whether people were "forced" into the dumb decision is irrelevant. Being ethical is doing what's right when you don't have to. Doing what's right when you have to is simply called obeying the law. Did Malone obey the law? Of course. Was he ethical? Hardly. Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted May 15, 2013 Share Posted May 15, 2013 educatedidiot, congratulations because it looks like you are up a lot right now. IDT looks like it will spin off the spectrum + patents. The spectrum + patent company might be undervalued after it spins off. Clearly Jonas sees the value in the patents... http://www.stockspinoffs.com/2013/05/14/idt-straight-path/ Link to comment Share on other sites More sharing options...
educatedidiot Posted May 16, 2013 Author Share Posted May 16, 2013 Thanks ItsAValueTrap. IDT has definitely provided a healthy dose of instant gratification. I've grown to like the spectrum and patents the more that I have studied them, and I think (hope?) your speculation that they will be undervalued by the market is accurate. They are not the easiest assets to understand the value of, which is why I valued them so conservatively in my report. Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted July 23, 2013 Share Posted July 23, 2013 http://www.stockspinoffs.com/2013/07/22/my-name-is-jonas-idts-straight-path-spinoff-nepotistic-ceo-choice-raises-questions-for-investors/ Stock Spinoffs has some analysis of the spinoff. IDT has always had a lot of nepotism in the past... in this case the nepotism looks like it could be harmful to the operations of the company. 2- The spinoff may have hidden value due to the value of its patents. This is definitely a situation that investors may miss (yet again). I bought shares of IDT when it was trading below $3 and sold everything after getting my CTMMA/B shares. Link to comment Share on other sites More sharing options...
Nassau Posted September 17, 2013 Share Posted September 17, 2013 I think IDT is, once again, a neglected stock trading at a deep discount with numerous near term catalysts for substantial price appreciation. - Earnings (likely 1st week of October) should be very strong based on commentary from the company on the last conference call. Boss is growing like a weed and I expect margins to expand as well as more customers reload their minutes online directly with Boss rather than in the store (less commission). On Q3 call, head of Telecom said: "Boss Revolution is doing really very strong. I mean in Q3 alone, we added more than 4,000 additional points of presence. We grew our active points of presence retailers by more than 50% year-over-year, by more than 10%, compared to the last quarter, and though we are looking to continue to expand both in the U.S., as well as trying to plant the seeds for a possible expansion into Canada over the next few months.... We are adding more IMTU properties into Boss Revolution. Compared to last year alone, I think we more than doubled the amount of properties. I think we have more than 130 properties at this point. And we are now right now, soft launching and testing our first pure payment type of products to go into Boss Revolution, both our domestic bill pay initiative, as well as our future Visa initiatives. So all in all, there is a lot of momentum going on behind Boss Revolution, both in terms of product, both in terms of distribution, both in terms of technology, and I think it will continue to grow, whether or not we add more salespeople into our workforce to help propel it to the next level." - Rollout of iPhone app for Boss Revolution has happened. - Announcement of dividend is expected. I expect 70-80c/share, which would give IDT a 4.5% yield. As the stock currently screens as if it has 0% yield, this should be a strong catalyst for the shares and income buyers. - Spinoff of Zedge. With the Twitter-mania and everything mobile/social in full effect, I expect this spin could command a valuation far in excess of what us value investors would pay for it. With 50 million active users, I could easily see a $50-100mm valuation, if not higher. I believe it is valued nearly $0 inside IDT. - Fabrix: many potential catalysts here, from additional contract wins, increased cash flow and/or a sale of the company, which it seems is management's ultimate goal. Likely buyers would include IBM (their current partner), CSCO (their chief competitor in Cloud DVR) or other large networking companies. Valuation here could theoretically exceed IDT's TEV. On the last conf call, Jonas expressed enormous bullishness for this business and indicated Fabrix cash flow could easily be 50% of IDT's based on the pipeline they're seeing. In sum, stock is dirt cheap with strong downside protection and large upside potential (I think $30+ is a real possibility here in the next 12 months as the storylines play out). Nassau Link to comment Share on other sites More sharing options...
onyx1 Posted September 17, 2013 Share Posted September 17, 2013 I think IDT is, once again, a neglected stock trading at a deep discount with numerous near term catalysts for substantial price appreciation. - Earnings (likely 1st week of October) should be very strong based on commentary from the company on the last conference call. Boss is growing like a weed and I expect margins to expand as well as more customers reload their minutes online directly with Boss rather than in the store (less commission). On Q3 call, head of Telecom said: "Boss Revolution is doing really very strong. I mean in Q3 alone, we added more than 4,000 additional points of presence. We grew our active points of presence retailers by more than 50% year-over-year, by more than 10%, compared to the last quarter, and though we are looking to continue to expand both in the U.S., as well as trying to plant the seeds for a possible expansion into Canada over the next few months.... We are adding more IMTU properties into Boss Revolution. Compared to last year alone, I think we more than doubled the amount of properties. I think we have more than 130 properties at this point. And we are now right now, soft launching and testing our first pure payment type of products to go into Boss Revolution, both our domestic bill pay initiative, as well as our future Visa initiatives. So all in all, there is a lot of momentum going on behind Boss Revolution, both in terms of product, both in terms of distribution, both in terms of technology, and I think it will continue to grow, whether or not we add more salespeople into our workforce to help propel it to the next level." - Rollout of iPhone app for Boss Revolution has happened. - Announcement of dividend is expected. I expect 70-80c/share, which would give IDT a 4.5% yield. As the stock currently screens as if it has 0% yield, this should be a strong catalyst for the shares and income buyers. - Spinoff of Zedge. With the Twitter-mania and everything mobile/social in full effect, I expect this spin could command a valuation far in excess of what us value investors would pay for it. With 50 million active users, I could easily see a $50-100mm valuation, if not higher. I believe it is valued nearly $0 inside IDT. - Fabrix: many potential catalysts here, from additional contract wins, increased cash flow and/or a sale of the company, which it seems is management's ultimate goal. Likely buyers would include IBM (their current partner), CSCO (their chief competitor in Cloud DVR) or other large networking companies. Valuation here could theoretically exceed IDT's TEV. On the last conf call, Jonas expressed enormous bullishness for this business and indicated Fabrix cash flow could easily be 50% of IDT's based on the pipeline they're seeing. In sum, stock is dirt cheap with strong downside protection and large upside potential (I think $30+ is a real possibility here in the next 12 months as the storylines play out). Nassau Yes! Boss Revolution will soon end the markets view of IDT as a "has-been" calling card company, once and for all. Link to comment Share on other sites More sharing options...
Nassau Posted September 17, 2013 Share Posted September 17, 2013 IDT also has $183mm of NOLs remaining based on the last 10-K. So, the company is run-rating at close to $40mm of EBITDA and has no little in the way of cash taxes. Way too cheap. Link to comment Share on other sites More sharing options...
Nassau Posted October 2, 2013 Share Posted October 2, 2013 IDT earnings coming tomorrow after the close, followed by conference call. If you look at latest presentation filed a few days ago it looks like they have basically said earnings are strong. Zedge performance has been very strong and hopefully we'll hear more about the spin-off as well as Fabrix. Presentations here: http://edgar.sec.gov/Archives/edgar/data/1005731/000121390013005162/f8k091813ex99i_idtcorp.htm Still dirt cheap. Nassau Link to comment Share on other sites More sharing options...
krazeenyc Posted October 2, 2013 Share Posted October 2, 2013 anyone here have thoughts on STRP? Link to comment Share on other sites More sharing options...
Nassau Posted October 2, 2013 Share Posted October 2, 2013 STRP is very cheap, could be a home run. Stats on Zedge are far more impressive though. * 75MM total installs (4.5MM total installs on iOS, which was literally just released) * 33MM active installs * 60MM content downloads per month (!!!) * Top 15 Google Play for the past 3 years * 20%+ Android handset penetration in the US (!!!) * 13MM Desktop Web monthly unique users * 20MM Mobile Web monthly unique users Most importantly, note that Zedge is not pre-installed on any phone - these are 100% consumer choice to download. There is news out that Flipboard just raised another $50mm at an $800mm valuation, and Flipboard claims 85MM installs - well, I am pretty sure these are largely OEM pre-installs, not consumer choice. I'd guess Flipboard pays quite a bit for those placements. http://allthingsd.com/?p=360164&ak_action=printable Link to comment Share on other sites More sharing options...
OracleofCarolina Posted October 17, 2013 Share Posted October 17, 2013 Though to be honest, I bought IDT when it was $2/3 and quickly flipped it after I got my CTMMA/CTMMB shares. I never understood it at the time and totally missed the boat. Then I played share arbitrage on IDT C/IDT and got killed (ultimately that trade would've worked out but I exited the trade early at a loss). CTMMA/CTMMB is quirky interesting company to watch. Essentially two separate businesses A travel brochure business(boring) and a comic book now tv arm, IDW Publishing. I saw this news today and it will be fun to watch to see if they can succeed in tv http://www.latimes.com/entertainment/envelope/cotown/la-et-ct-idea-and-design-20131017,0,7649218.story Link to comment Share on other sites More sharing options...
Nassau Posted October 25, 2013 Share Posted October 25, 2013 This article sounds very bullish for Fabrix, as Cox Communications CTO says Cox "is looking at using a DVR solution similar to Cablevision's (NYSE: CVC) which would be based entirely on cloud-based servers." Fabrix provides the software and servers that run Cablevision's Cloud DVR services. Also, IDT just disclosed it increased its stake in Fabrix to 88%. IDT could re-rate significantly if it becomes viewed as a cloud storage company. http://www.fiercecable.com/story/cox-eyes-hybrid-cloud-dvr-solution/2013-10-23#ixzz2ikejqD92 Link to comment Share on other sites More sharing options...
xtreeq Posted March 17, 2014 Share Posted March 17, 2014 DeNA goes with customization app Zedge to drive user acquisition http://venturebeat.com/2014/03/11/dena-goes-with-customization-app-zedge-to-drive-user-acquisition/ Link to comment Share on other sites More sharing options...
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