Hi folks — got an interesting one today that came in connected to the “Taipan chart of the day” — the chart itself was actually for Millicom, the fast-growing Latin American cell phone company, and they also talked about Vimpelcom, the phenomenally successful Russian cell phone company.
But the meat of the ad was focused on cell phone GPS — and a company that we’ve seen before. I decided to share a few words about it because this one seems to be getting a lot of attention from the business pundits of late.
There’s a good quote in the ad:
“According to The New York Times, “For now the market for [mobile GPS] services is tiny. But wireless carriers, mobile phone makers and others are salivating over the potential revenue.” That’s right; they said salivating.”
And that’s more or less what I’ve been seeing lately, too — Andrew Mickey at Breakaway Investor first started touting this one a few months ago, and was quite early to the party, but it looks like the shares are getting a fair amount of attention again.
The other clues:
Upgraded by Lehman brothers within the last week, and by Credit Suisse a few weeks ago, both to “overweight.”
Shares up 46% in the last five weeks.
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We get a link to the old ad, and to the tout for Mickey’s Breakaway Investor newsletter service — remember, this is the ad that said this technology would be the next cell phone, the next personal computer, yada yada yada? The breakthrough technology from the defense department? Send us $49 now and we’ll tell you what it is?
That’s right, we’re talking about our old friend …
SiRF Technology Holdings (SIRF)
So this isn’t a new stock idea — it was Andrew Mickey’s bread and butter advertising push all summer, it seems, and he consistently refers to it his favorite theme and long term idea. They essentially make and sell the chip that provides cell phones with GPS capabilities, and they have a very strong position in the market.
And it was nip and tuck for a while there — the shares are up 46% partially because they first fell by about 30%, in August when investors got worried about their competition (they have a huge market share — 80 or 90% in cell phone GPS chips, but there are other companies with competing products, like Broadcom, that are making a push). So it’s not like this is a constant momentum driver that’s going straight to the moon … or if it is, it’s not immune to the occasional detour.
Mickey first recommended it, or I saw his ad for the first time, back in mid-June, so for a while this was under water on the Gumshoe Spreadsheet, but now it’s back up by close to 20% thanks to the recent run (the shares were trading at about $22 when I first saw this one touted). The initial writeup of the teaser is here if you’re interested.
But now, there are lots of fans.
They signed a collaboration deal with Intel right around the time the shares started falling in July, which some folks think have promise, and a more recent deal to provide chips for Motorola. They got nice coverage from the two brokerages noted above. And in general, handset technology providers and GPS-related companies have had a decent run (though not quite all of them) over the past month, partially due, I’m sure, to the Navteq/Nokia deal. I even heard them on the XM Radio this evening, being touted by one of the yappers on CNBC’s Fast Money — Pete Najarian, I think — because the call option volume has picked up significantly, which in their system means good things ahead.
So, I don’t know if this is really going to be a winner or not, but it’s getting a lot more attention so I thought I’d mention it again. I do own some speculative call options on this one myself that I picked up on a bit of a contrarian gamble when the shares were tumbling back in August, but I’m not particularly expert in this technology and I certainly don’t know if the stock will continue this recent climb.
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