Tony Sagami’s “The Death of Mobile” Stock

by Travis Johnson, Stock Gumshoe | May 27, 2014 4:04 pm

Which company is behind "Silicon Valley unleashes the 'MOBILE SUPERNET?'"

The latest ad from Tony Sagami for his Disruptors & Dominators newsletter has been driving a lot of questions to the Stock Gumshoe inbox, and he’s actually been circulating a similar ad for about two weeks now for his Blue-Chip Option Alert service — recommending, it appears, different trades (one option, one equity) on the same basic theme.

We didn’t look into the Blue-Chip Option Alert teaser in detail when it first ran, though there was a discussion of it here on the site, but now the push is seemingly even more aggressive for this Disruptors & Dominators letter, so we’ve moved this one to the top of the pile for the Thinkolator’s consideration.

So what is Tony Sagami pitching? It’s a telecom stock, here’s how he teases it:

“The destruction of the ‘mobile internet’ is about to usher in a new age of tech profits that DWARFS the Tech Boom of the 90’s …

“Get ready for gains of 268% … 622% … 949% or MORE in just a few weeks … as Silicon Valley unleashes the ‘MOBILE SUPERNET.'”

So it’s certainly on a hot theme — nothing is disrupting the world of technology more than the huge sea change to mobile technology, putting your TV and your office in your pocket and putting significant strains on network data capacity and on advertising-driven business models. But what is this “mobile supernet” he speaks of?

Here’s some more of the tease:

“most mobile data networks are running on technology that’s the equivalent of dial-up service back in the 90’s … extremely slow and extremely unreliable….

“… it’s not your fancy iPhone that’s the problem … it’s the outdated cellular networks.

“With the way the technology works … it’s almost impossible to get those “5 bars” of service … and if you do manage to get a good connection spot, you better stand perfectly still or risk losing your good connection.

“Plus, crowded areas like New York, Chicago and San Francisco are already experiencing severe congestion on their networks which slow your internet to a snail’s pace.

“And while the new 4G connections are closing the speed gap …

“It still doesn’t solve the fundamental problem of reliable coverage areas … and it still won’t help you when a tower is overloaded with thousands of people trying to use the mobile internet at the same time.”

I don’t run into these problems as much anymore, but they certainly come to light sporadically — and I do remember the problems AT&T had in New York City a few years ago with the shocking (for them) spike in data usage as the iPhane became quickly popular, I had a couple trips to Manhattan during which my phone was essentially unusable. I imagine those problems continue, in pockets at least, and that’s a large part of the reason that providers are now trying very hard not to offer “unlimited data” … if you’re going to crush their network, they’d like to be able to charge you more so they can buy more towers or spectrum.

But what is it that Sagami is pitching as a solution? Well, this is a two-parter — he first teases the technology, but the technology is not directly investable for those of us who aren’t in the venture capital world. And next he teases the one way to invest in the early days of this new “Mobile Supernet”. We’ll take it in two parts as well.

Here’s how he pitches the tech:

“According to a recent article on Business Insider … it has the power to ‘reinvent wireless.’

“And John Scully, former CEO of Apple says, ‘[the Mobile Supernet] is an authentic ‘moon shot’ disruptive invention, [just like] in 1982 when Steve Jobs showed me a prototype of the Mac … ‘

“It’s over 1,000-times faster than the current 4G technology …

“Plus it solves one of the biggest problems plaguing the mobile internet industry today … spotty service.”

I think we need some better phrase than “moon shot”, frankly — it conjures up a clear image of a risky bet-it-all enterprise that’s trying to do something unprecedented, which is great… but even if you get past the probably unhelpful “engineering heroism can fix all” uses of the “moon shot” phrase in political life, the fact remains that it uses as an example of big and risky investment something that is one of the incredible modern scientific success stories, which colors our ideas of risky change (assuming, of course, that you’re not one of the folks who believes the moon landing was faked). Wouldn’t you think about the phrase “moon shot” differently if Apollo had been an expensive failure? We’ll accept any and all submissions for a new big-bet metaphor.

But more to the point, what’s the change that makes mobile service better?

“… the ‘Mobile Supernet’ solves this problem once and for all.

“They’ve created a brand-new antenna that’s the size of a notebook … and they can be placed on literally every city block without causing any interference.

“In fact, this breakthrough technology combines all the signals, amplifies them, and turns your smartphone into your own “personal cell tower.”

“The technology is revolutionary and complicated but what that means is, you get perfect ‘5 bar’ coverage everywhere you go.

“As wired puts it … ‘Since the invention of wireless, people have moved around the coverage area. Now, the coverage area follows you.'”

So that, as many folks in previous discussions have noted, is a reference to a company called Artemis (there’s the moon again) and an inventor named Steve Perlman who’s trying to create the next generation of wireless, which he calls “pCell.”

And no, even if you think this will be a huge success you probably can’t buy shares of Artemis, it’s just in the first stage of commercializing the technology and is still a part of Perlman’s tech incubator company (called Rearden) … but the technology does certainly seem plenty cool. You can see the Wired article quoted in the ad here[1], and there’s another worthwhile article here[2] that includes the “moon shot” quote and the comparison to Steve Jobs and the Mac. The company they’ve worked with to actually build the antennas/base stations is PureWave, which is also venture-backed and private.

So what’s our investment idea here, Mr. Sagami?

This Stock is Set to Double by December 15th, 2014

“Fortunately for us … this small tech company I was telling you about just made a major breakthrough which could change the face of mobile … and it has all the major cell phone carriers shaking in their boots.

“Unfortunately, this small tech company is not traded on any public exchanges right now …

“But I’ve found an even better way to play this emerging technology trend.

“You see, they’ve recently signed a licensing deal with major telecom company to roll out a beta version of their technology in San Francisco by December 15, 2014.”

So who is it? This is, according to the Mighty, Mighty Thinkolator, Dish Network (DISH)

And we’ll give some credit where it’s due here — Rosalind, one of our Irregulars, did call attention to Dish in the initial discussion[3] of the ad a couple weeks ago… though the ad was a bit different at the time and she thought it was teasing a hardware company. She’s right, though, the tease from Sagami is for Dish Network. Which is, to say the least, an interesting company.

DISH is controlled by Charlie Ergen, who has 80%+ voting control of the company as Chairman and who has been very willing to make big gambles in the past (he was a professional card player — the story is that he started Echostar, selling satellite dishes door-to-door, after getting kicked out of a casino for counting cards at Blackjack). He’s also been a subject of almost endless speculation as people try to figure out what he’s going to do to turn DISH into a more relevant player in the evolving telecom space and whether it means DISH is an acquirer or a acquiree, no one seems to think that DISH will continue to stand alone for long. Speculation heated up last year, when Ergen tried and failed to acquire Sprint (it was bought by Softbank instead, we talked a bit about them last week[4]), but DISH is in the news again now because of DirecTV. Dish Network has been a second-place player behind DirecTV in most areas, and now with DirecTV in the process of being acquired (regulators permitting) by AT&T the natural question is… whither DISH? If they continue along mostly being just a satellite TV provider and there’s no value realized from the spectrum they own, then the stock is way too high for a stagnant part of the industry.

Well, part of Ergen’s plan for DISH obviously includes wireless broadband — he has spent billions buying up national wireless spectrum that he doesn’t need for satellite TV, and with Sprint now in other hands there’s been speculation that he’d move to acquire fellow also-ran T-mobile (which Softbank also wants to buy, if regulators would endorse going from a duopoly with two hangers-on to a triopoly). There’s even been some speculation that the delay of DISH’s annual meeting[5] means something big is in the offing, so perhaps there will be something exciting coming soon. Or perhaps not… Ergen can do pretty much whatever he wants to the company, given his voting control and 50%+ shareholding, and he’s not talking much in the way of details other than reiterating how valuable the spectrum might be for something like fixed wireless broadband/TV and the notion that they might build that out themselves (you can see his latest comments in the last DISH quarterly conference call transcript here[6]), so we’re left to guess.

You don’t need me to guess, since I have no idea, but there was a good article in the FT last week about the possible permutations[7]… and it reiterated, importantly, that building a new national broadband company would probably require both a partner for DISH and a lot of capital to build out a new national service. Buying T-mobile would give them a partner, but no cash, and they probably don’t have enough money to outbid Softbank if regulatory approval is possible for a Sprint/T-mobile merger… so it seems likely that the sensible outcomes for DISH are either selling off their valuable spectrum or attracting a deep-pocketed partner, and analysts seem worried that the whirlwind wave of telecom marriages has left DISH the last one standing. Who knows, maybe the big tech guys will get interested in national spectrum, too (a la Google’s efforts to spur more high-speed internet through Google Fiber), but the “natural” partners are more limited.

Will Artemis change the landscape for DISH? Well, there’s no indication I’ve seen that DISH has any equity in Artemis or any control over them, but they are the first major partner for Artemis. And they are rolling out a test to get coverage across the San Francisco Bay Area — I have no idea what exactly the test is aimed at or who will be testing what kind of data transmission, perhaps they’re just after proving the concept at something like real-world scale outside of a lab… but it is Dish spectrum and Artemis’ pCell technology being tested. The pCell technology is supposed to work with existing 4G devices, so it wouldn’t necessarily require a new wave of consumer devices or boxes — but it would require thousands of additional antennas even just to cover the Bay Area. Artemis was supposedly going to test their technology on the Clearwire network in the same geographic area last year, and by some reports they did test it, but I haven’t seen anything about what the results were (Clearwire, coincidentally enough, was the first of the “national wireless braodband” attempts and, after burning through incredible amounts of cash and enticing investors for years, is now owned by Sprint/Softbank).

Does that mean DISH will double by December 15? That strikes me as a bit ambitious, but DISH is absolutely a big story in search of a catalyst, even if that search for a catalyst or a good “hook” for the story has been going on for several years. It’s a big company with a market cap of almost $30 billion, and it’s profitable, but any valuation assessment of DISH has to be built on some kind of valuation for their unused spectrum and the optionality of what they might do with that spectrum — they certainly aren’t worth 30X earnings as a third place (in most markets) provider of video content.

Presuming Sagami was also touting DISH options for his earlier options teaser pitch using this same story, the December 2014 at-the-money call option buyers are betting that DISH will rise by at least 10% — but there aren’t many of those contracts outstanding, I’d assume that if Sagami suggested a specific option trade he probably pointed to the September $65 calls or the January $75s, but that’s just a guess because those options have the highest open interest (it’s unusual to see a newsletter of any real size tout an options trade and not see open interest of at least 5-10,000 in that contract — FYI, “open interest” is essentially the count of existing contracts at that strike price, netting out the contracts that were opened or closed on that day, so a small number means very few people are in that options trade… “volume” is the number of contracts traded during a particular day).

I’ll leave it to you to guess which direction the stock will move, and when, but can just confirm that yes, DISH is the Artemis partner in San Francisco; and yes, if Artemis is going to roll out their pCell nationally then DISH does have the available spectrum to commit to something new (if not the available capital). I suspect we’re getting a bit ahead of ourselves in assuming that the first test of this pCell in California later this year is going to shake the earth… but you never know, maybe it really is a “moon shot.”

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Endnotes:
  1. Wired article quoted in the ad here: http://www.wired.com/2014/02/steve_perlman_pcell/
  2. another worthwhile article here: http://www.tvtechnology.com/distribution/0099/artemis-networks-claims-%E2%80%98reinvention-of-wireless-technology/223799
  3. call attention to Dish in the initial discussion: http://www.stockgumshoe.com/2014/05/microblog-how-to-make-money-from-the-mobile-supernet/
  4. talked a bit about them last week: http://www.stockgumshoe.com/reviews/sa-short-report/backdoor-loophole-into-the-biggest-ipo-in-history/
  5. delay of DISH’s annual meeting: http://blogs.wsj.com/moneybeat/2014/05/21/dish-network-and-the-case-of-the-missing-proxy/?mod=yahoo_hs
  6. last DISH quarterly conference call transcript here: http://seekingalpha.com/article/2204513-dish-networks-dish-ceo-joseph-clayton-on-q1-2014-results-earnings-call-transcript
  7. good article in the FT last week about the possible permutations: http://www.ft.com/intl/cms/s/0/06f3d574-e109-11e3-b59f-00144feabdc0.html#axzz32w1yNQAk

Source URL: https://www.stockgumshoe.com/reviews/disruptors-dominators/tony-sagamis-the-death-of-mobile-stock/


  1. Dave
    May 27 2014, 04:58:49 pm

    ““Get ready for gains of 268% … 622% … 949% or MORE in just a few weeks …”
    I love these VERY PRECISE figures that are always spewed by the Weiss marketing team. Not 267%, or 269%, oh nosiree, it’s 268%, exactly! And then the “or MORE ” which makes the bogus precision seem all the more ludicrous.

  2. vivian lewis
    May 27 2014, 05:50:36 pm

    while I am also guessing I think that Carlos Slim Helu who alternates between being the richest man in the world or the 2nd or 3rd richest may be looking to head north of the Rio Grande to Los Estados Unidos. He has just been freed to do that by AT&T (T) exiting from America Movil, Slim’s major company, after owning c19% since 1980 when Slim acquired Telefonica de Mexico in a crooked deal with the Carlos Salinas government of Mexico. DirecTV, which T is now buying, competes with America Movil via Sky Mexico which DirecTV bought a couple of years ago from Rupert Murdoch and John Malone. Most of Sky belongs to Televisa, the Mexican TV giant and Slim’s big rival Down Mexico Way.
    I think Malone who loves stitching things up in making approaches to T, but I also think Slim wants to find a trump card in his pack. DISH may be it. Of course I am guessing. But it is not out of the question as Slim has more money than God.

      • Myron Martin
        Myron Martin
        May 27 2014, 07:14:25 pm

        Well said, however I would go a little further. God may not need money, but HE does tell us what money actually is, and it certainly isn,’t worthless pieces of paper corrupt men print meaningless numbers on and claim a monopoly to collect interest on, based on a Ponzi scheme created in 1913 known as the The Federal Reserve Act.

        • Blind Guide
          May 27 2014, 09:17:55 pm

          Hi Myron,
          I’m curious…I’ve read the Book several times and – despite the fact that there are myriad references to money’s historical characteristics, purposes and vices – can recall no actual God-given definition…would you kindly enlighten me with scripture and verse, please?

          • Ferruccio Fortini
            May 31 2014, 10:04:13 am

            James 5:2-3 implies a parallel of “riches” to “gold and silver” (and fiercely condemns both) as it says “Your riches are corrupted” and “Your gold and silver is cankered” in what’s a typical Biblical “parallel construct”. There are many other Biblical references to gold and silver, and many other condemnations of the pursuit of wealth, but I can’t locate one which essentially equates “wealth” (or “riches” or “money”) to silver and gold as directly as this one (always in a condemning mood, of course).

  3. carbon bigfoot
    May 27 2014, 07:06:37 pm

    God has a sense of humor–he allowed Barry to become pres.
    As far as the numbers they are probably the work of Fibonacci.

  4. Blind Guide
    May 27 2014, 07:23:29 pm

    Once again, ‘Gummy’ is out in front of the crowd uncovering the pertinent facts of even the most obscure teases…great work…as always!
    The Weiss Team – or UnWeiss as I refer to them now – was one of the first investment e-letters I got hooked into some 5 years ago when I seized the reins of my little covered wqgon (IRA) and set out across the vast plains and wilderness pioneering my way westward toward investment GOLD! The shiny metal itself was among the best of their reco’s…for a while…poor Larry (Edelman) is now caught back-stepping side-stepping & hedging in what has become only an occasional dispatch – as compared to daily reviews – since gold ‘tanked’! Watching them over the years has been enlightening as to the nature of this niche publishing market as over-hyped ‘services’ grow long in the tooth and new ones are born from the ashes (e.g. my brief subscription to their ‘brand-new’ Million Dollar Portfolio which was actually an existing service whose failed ‘genius’ had just been quietly replaced) and/or previously-near-infallible ‘gurus’ quietly disappear only to become the newest ‘superstar’ of another team’s roster, often with a completely different area of ‘world-beating expertise/talent’ (e.g. Sean Broderick’s defection to the O Club where – instead of only the miners/resources he hyped at Weiss – he now has ‘boots on the ground’ expertise in energy, ag and more). One of the most interesting things about the UnWeiss is Martin himself, his professed dedication to conservative methods, his ‘invaluable’, unbiased ratings, the ‘wisdom’ his father passed on to him, etc. all the while sitting at the helm of this phantasmic, story-telling machine & publishing empire.
    I rather prefer the time when I was naiive to all this!
    Sagami remains one of the ‘insiders’ at Weiss since my introduction some 5+ years ago usually applying his own ‘boots-on-the-ground’ skills to the Asian markets justified largely by his Japanese-American heritage. His recent article – sluethed above – caught my interest but I was stymied after ‘hitting the wall’ at Perlman/Rearden’s Artemis p-cell (aka DIDO). Travis’s elucidation of the actual business link to Dish was most helpful. However, the really interesting aspect for me was his reference to Dish CEO, Ergen’s background/personality – a professional gambler – WOW! The coalition of Ergen and Perlman (whose credentials/accomplishments establish that he is a certified, crack-pot genius of the highest order!) seems a moon-shot in and of itself!
    This should be fun to watch!!
    I must admit that the significance of unused bandwidth in regard to Perlman’s solution to the conventional-tech bandwidth problem was lost on me. My research seems to say that the pCell concept relies on old-fashioned radio waves (?) rather than cell-tower frequencies thereby avoiding/taking advantage of the interference issues that prevents simply ‘smothering’ high-traffic areas with additional cell towers. To the contrary, however, it is evident that the pCell/pWave system is capable of serving current cellphone-type tech devices, as well as, ‘handing off’ users to existing cell towers when pWave proximity is unavailable. In additon, it is confirmed that Artemis will be teaming with Dish to demonstrate the pCell/pWave system in San Francisco this year.
    Hopefully, some of you younger, tech-savvy readers can unravel this seeming radio-frequency vs cellular bandwidth mystery for this old codger!
    Meanwhile…I’m thinking about buying DISH since neither Artemis nor PureWave are publicly listed…what say ye?

  5. Serg
    May 27 2014, 08:07:29 pm

    Where does VPLM fit into the wireless scheme of things? They have 6 patents that are supposed to be game changers but I haven’t seen them mentioned anywhere. Thanks Travis for all your great insight.

    • 8912 |
      Travis Johnson, Stock Gumshoe
      Travis Johnson, Stock Gumshoe
      May 27 2014, 10:03:33 pm

      Nowhere, as far as I can tell. I am certainly not qualified to judge whether their patents or patent applications are important or viable, and I’ve not looked at the operations of the business, but the finances look like those of a pump-and-dump target stock (not saying it is, I’ve not seen any promotions about it). The website says they’re looking to monetize their patents and the half-dozen or so VOIP-related patents appear to be their only assets and they appear to have ceased any other activity (they were or are also a provider of VOIP calling services) to pursue monetization of the assets, which presumably means they hope that someone buys the company… so I’d really want to understand whether those patents are genuinely valuable (which means I’d want to have some source for that information aside from the company itself).

  6. Larry A.
    May 28 2014, 07:11:56 pm

    Still looking for any info on David Dittman’s tout for “Rushmore Plan Riches”. Dittman’ writes for Investing Daily.

    • 8912 |
      Travis Johnson, Stock Gumshoe
      Travis Johnson, Stock Gumshoe
      May 28 2014, 07:45:10 pm

      I’ve seen his pitch, it’s for utilities in general (he’s running the old Utility Forecaster service that used to be Roger Conrad’s (Conrad moved to a new publisher, now puts out Utility Investor) but haven’t looked for specifics yet.

  7. Paul Zonderman
    May 30 2014, 04:16:14 pm

    Michael Robinson has teased his Nova-X Report recipients with the identity of “Operation Blue Star’s Silent Partner”. This is the company that will spread the Tesla charging stations all over the US and will give us a 2000% windfall. Have you heard about this. Would love the Think-O-Lator to chew on this.

    Paul

  8. 181 |
    Bradley
    Jun 2 2014, 12:31:28 pm

    I actually think the technology has legs. There is quite a lot of information on the Artemis website if you scroll through the “news”.

    Travis, does Artemis “need” a DISH for their spectrum to be successful? In other words are they going to avoid all kinds of regulations/applications by jumping on board with someone who has an infrastructure in place. Trying to answer my own question as to why not go it alone.

    • 8912 |
      Travis Johnson, Stock Gumshoe
      Travis Johnson, Stock Gumshoe
      Jun 2 2014, 12:52:13 pm

      Whoever delivers radio waves needs access to spectrum, I was under the impression that Artemis is focused entirely on being an equipment designer hoping to sell to the existing 4G/LTE networks, since their technology is compatible with that technology. They don’t even build the antennae, they just design them — they are very small.

  9. David Trotter
    Feb 7 2015, 07:37:03 am

    I would consider investing in Artemis and would love to buy into Rearden if I could. However, Dish is $4 under their 52wk high and that is a pricey bet, especialy after watching GSAT and the rest.

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