What’s Casey’s Tiny $10 “5G Master Key” Stock? [Updated]

E.B. Tucker hints that "A Tiny Stake in this Company Could Set You Up for Life"

By Travis Johnson, Stock Gumshoe, February 7, 2020


This teaser ad has been running for several weeks now, and the article below was originally published on January 21… but we continue to get lots of questions about it, and the story has changed pretty dramatically in the interim, so I’m re-posting it here for you and have added an update at the end.

There seems to be no limit to the number of different 5G pitches we can absorb… the newsletter pundits of the world have their teeth into this latest telecom trend, and they’re not letting go until they’ve signed up every possible subscriber.

The promise this time is that a small company possesses the “Master Key” technology for 5G, enabling it to solve 5G’s well-known problems (like, the fact that some of the wavelengths used mean the signals can’t get through walls, or even windows or leaves)… and the fella making the promise is E.B. Tucker in ads for Casey’s Strategic Investor ($49, renews at $129/yr).

Here’s a little taste of the ad:

“… giant telecom firms — like T-Mobile and Sprint — have focused their attention on ONE tiny company…

“That owns a powerful new technology…

“That instantly fixes 5G’s glitch…

“And should reward early investors with a windfall.

“My research indicates this tiny firm’s shares could soar 9,700% in the months ahead.”

9,700% is an awful lot, no?

Are you getting our free Daily Update
"reveal" emails? If not,
just click here...


Here’s Tucker’s take on the challenges for 5G, and how this little company can solve them:

“5G’s flaw could slam the brakes on its nationwide roll out.

“That’s why, recently, a key telecom executive made a shocking confession…

“T-Mobile’s Chief Technology Officer let slip:

‘[To get 5G coverage] you’ll need no walls, no windows, no buildings, no trees… and lots of luck’ ….

“… the short waves that 5G Wi-Fi uses to pull off lightning-fast internet…

“They’re not suitable for wide area coverage.

“Right now 5G signals can be blocked by virtually any object…”

So how, dear friends, does this problem get solved? More from Tucker:

“But here’s where the 5G story takes an interesting twist — which could make early investors a fortune.

“One tiny company that’s 1/500th the size of the big telecoms…

“And much less than 1/10th the size of Apple, has emerged with an ingenious solution….

“It’s a miraculous technology that looks like an ordinary black box…

“That promises to unleash the true power of 5G.

“And take it nationwide — practically overnight.”

So what else do we learn about this company? The ad drops the clue that they have “over 124 patents”, so that’s something.

And we get some hints about the customers they’re already working with:

“As we speak, huge telecoms are already knocking on its door…

“It’s inked multi-million-dollar contracts with T-mobile and Sprint.

“Including major networks in China, U.K, France, Japan, Australia, Russia, and Brazil.”

And we’re told that “its shares trade for less than $10 a pop…”

So what’s the solution here?

“What this tiny company has achieved is incredible.

“Working from the prototype used by the armed forces, they’ve built a new device…

“Powerful enough to transmit high-bandwidth 5G signals…

“To every corner of the country.

“Without littering the landscape with thousands of expensive and unsightly towers and antennas.”

OK, so somehow they’ve fixed the “can only transmit a short distance” problem? How so?

Tucker explains it like this:

“… big telecoms with two choices:

“One: They can build and place tens of millions of cell antennas every few 100 feet.

“Connected by over 1.4 million miles of fiber optic cables…

“Enough to circle the earth 353 times.

“Which — by the way — could take YEARS.

“Or they can simply turn to the tiny firm I’ve discovered… and their “out-of-this-world solution” — which could solve the 5G flaw, with the turn of its master key.”

OK so what is this “master key” technology? Here’s more from the ad that explains some of it… and it’s essentially a satellite solution:

“This firm’s technology can transmit and extend short-range 5G signals…

“Then blanket huge areas with those extended signals for wide coverage and seamless connectivity…

“Using micro satellites that hover above Earth…

“This incredible technology is called: The SKY.

“Once the SKY is launched into orbit…

“It can distribute 5G signals over a wider area where earth-based cells, towers, and cables can’t cover.”

I’m not sure I get the logic here — how does a 5G signal from a satellite do a better job than a 5G signal from a tower? You’ve still got roofs and walls and trees and such in the way, no? Maybe once we’ve identified the answer this will become more clear.

So with that in mind, how about a few more hints? Here you go:

“Gazprom Space Systems (GSS) handpicked this company — in an 18 million deal — to help spread broadband coverage across all of Russia.

“Recently China Satcom selected this company’s ground-breaking technology to provide broadband connection across China.

“And in Peru, the company’s deal is worth $285 million — to provide connectivity support.”

OK, so now the Thinkolator can get us our answer… this is the Israeli company Gilat Satellite Networks (GILT).

So before we go much further, I should note that the stock surged higher over the past week and weekend (markets are open on Sunday in Israel)… and it has nothing to do with Casey Research or E.B. Tucker — there was a rumor that Gilat is in “advanced talks” to be acquired for $579 million by a “major multinational.” Which would be just about $10.50 a share, and the stock has surged to near that price already, despite the fact that this is still really just a rumor and might easily amount to nothing (or, of course, might be just the start of a bidding war if they get lucky).

So for those who bought last week on the Casey tease, you might get a quick 20-30% return if things work out well with this takeover rumor — though, of course, that’s a far cry from 9,700%, and it makes you wonder whether perhaps those dreams of insane riches are a bit out of touch with reality. After all, a company that thinks its going to ride a huge sales surge and be the “key” to 5G’s rollout worldwide doesn’t willingly get into talks to be acquired for a mere 15-35% premium.

Let’s assume that the takeover rumor is just a rumor, and the stock gives up some of those gains in the coming days as Gilat responds to the news… what’s the story with the company, and does it look appealing?

Well, they are well-positioned as a provider of satellite modem technology — they seem to have the lead in mobile broadband options for airlines, for example, and they are the leader in satellite backhaul services for 4G, which might give them a lead in 5G.

This isn’t something that fixes the problems with 5G, though — the problem it might solve is not that you need a lot of 5G antennas on the ground to provide seamless mobile 5G services, that will still be necessary even if they use Gilat’s satellite modems… the problem they can solve is the cost of running fiber networks for backhaul to each of those 5G base antenna base stations.

Or at least, that’s how I understand it after a few minutes perusing Gilat’s website — you can see their investor presentation here (or their 2019 Year in Review article here) which gives a good overview of what they see as their strengths and priorities (satellite broadband and in-flight broadband, in addition to cellular backhaul), and the “cutting-edge device” that he says is the “5G master key” seems very likely to be Gilat’s SkyEdge II-C system, their latest VSAT platform (VSAT is Very Small Aperture Terminal, essentially the “modem” that powers a two-way satellite ground station).

So the solution here, I guess, is that the many local 5G antennas and base stations that will be required to provide seamless millimeter wave connections could get their backhaul access to the network through Gilat’s satellite equipment and, presumably, low earth orbit (LEO) or other non-geostationary satellite constellations (closer to the earth = faster). I can see there being a market for that, as there is clearly a market for mobile broadband in airplanes and for broadband in areas with weak terrestrial telecom networks (like Peru, for example, one of their major customers). It doesn’t sound to me like this is the key for 5G, though, just that it might be a way to make rollout more efficient or inexpensive if the satellite backhaul is cheaper than providing fiber to all of the small cell base stations that will eventually be required.

Which might be a decent business, I don’t know — the company has been improving a bit in the past year or so, with a push from the private equity firms who own more than a third of the stock (and therefore make an eventual “exit”, perhaps through this rumored takeover, seem a bit more likely than would be the case for other small-cap tech names with growth hopes). They do have competitors, most notably the much larger Hughes business owned by Echostar (SATS), but they also have a much better balance sheet than the companies who actually have to pay to launch and maintain satellite networks (GILT sells the technology, they don’t own satellites themselves).

GILT is profitable, with earnings per share of about 31 cents over the past year, but they saw profits decline for about seven years until things started to pick up with their new investors and a new focus on efficiency and profitability in 2018. It would be a bit of a shame if a takeover bid cut off this improvement before it really got underway, but, of course, it could also be that this boost in profitability over the past 18 months or so is not sustainable. I can’t say that I know enough about the business to be sure either way.

So sure, GILT is an interesting idea… and they should be in some key growth segments with the increased availability of mobile broadband and the big investments that SpaceX, Amazon, OneWeb and Telesat are making in new LEO satellite broadband networks, along with probably growing demand for satellite-powered backhaul for both 4G and 5G. That makes it a story worth investigating, particularly given their good balance sheet and recent income statement improvement, but certainly don’t guarantee that GILT will be the key to 5G, or have any chance at mammoth 9,000% returns.

I’ll keep an eye on this one — the lack of a scary balance sheet makes them stand out a bit in the satellite business, and we do seem to be in a pretty big investment phase for satellite communications… though the competition has also made it tough for them to be consistently profitable over the past decade. And, of course, I’m curious to see whether these weekend rumors of a takeover bid amount to anything — I’m not particularly interested in jumping into the stock after those rumors drove it 30% higher in a week, but if things die down a bit I could see myself being intrigued.

That’s just me, though, and what I’m thinking of doing with my money — what matters for you and your money is what you think… so where do you come down on Gilat? Think it will dominate the future of baseband satellite services and mint money, or be taken over at a bigger premium than what’s been rumored this week? Or is this another satellite hopeful that will disappoint when the market turns out to be smaller than all had hoped? Have a different take? Let us know with a comment below.

And your February 7 Update…

Well, now the deal that was a rumor on January 21 has been announced, with the news on January 29 that Gilat has agreed to be acquired by Comtech (CMTL). Assuming the deal goes through, Gilat shareholders will receive $7.18/share in cash and 0.08425 of a Comtech share for each share of Gilat held.

CMTL shares dropped sharply on the news, down 20% or so, so that portion of a Comtech share would be worth about $2.52 at the moment, for a total deal value of $9.70. GILT is trading very close to that at $9.55 or so, down about 8-10% from when I covered this teaser and the initial rumors of an acquisition were circulating.

You can see the presentation they posted about the deal here. Both companies are relatively expensive but believe they’re positioned well in a rapidly growing satellite communications industry, and they expect the deal to be ‘cash accretive’ in the first year, with the debt financing expected to be repaid pretty quickly… their financials are fairly similar, and both companies are profitable, so adding Gilat won’t dramatically improve margins or cash flow at Comtech, but it will help a little bit and there will likely be some cost efficiencies in the first couple years.

The more important rationale is strategic, in that it gives Comtech more international exposure and a stronger position in in-flight data and 5G backhaul offerings, among other things… and they’ll be bigger, so they’ll have a larger and more efficient R&D push, but the combined company will still be fairly small, with a market cap not much over $1 billion, so there’s certainly plenty of room to grow in a growing industry.

Whether it works out or not, I don’t know — Gilat shareholders will vote on the deal in the next few weeks, but almost half of all the shares have already been committed to vote “yes” so a consummation of the deal seems very likely. The new company will be slightly less levered to the 5G backhaul business opportunity than Gilat was, but that wasn’t as big an immediate story as the tease was implying, anyway, it will still be a focused company with what they say will now be more of a leading position in ground infrastructure for satellite networks.

So it may not be the 5G “Master Key” in any real sense, but the combined company will be profitable, pretty reasonably valued, with a manageable debt burden, a small dividend, and a potential to grow pretty nicely if they can maintain their position in the satellite equipment business, which shows some signs of substantial growth in the years to come. There hasn’t recently been dramatic growth, revenue growth for the combined company over the past year would have been in the low single digits, so whether it’s worth paying a decent but not crazy growth premium for the shares really depends on whether you think we’re about to see a jump in satellite communications. Seems like a reasonable bet to me, but I haven’t invested.


Irregulars Quick Take

Paid members get a quick summary of the stocks teased and our thoughts here. Join as a Stock Gumshoe Irregular today (already a member? Log in)

99
Share your thoughts...

avatar
19 Comment threads
80 Thread replies
0 Followers
 
Most reacted comment
Hottest comment thread
61 Comment authors
inperpetuityWoodworkpaulTravis Johnson, Stock Gumshoebackoffice Recent comment authors

This site uses Akismet to reduce spam. Learn how your comment data is processed.

archegos2691
Member
👍33
archegos2691

Also check Iridium (IRDM) , I believe they are in the same space,

bender11atcomcastnet
Member
👍11
bender11atcomcastnet

No pun intended…

initialfx
Guest
initialfx

I may have been over-thinking it, but was looking at gallium-nitride (GaN) technology markets. Seems like this may be the “key”

spacepig
Irregular
👍42
spacepig

Things are getting ready to hit the fan this year with SpaceX vertically integrated and planning to launch a gazillion low earth orbit internet service satellites that will require a flat plate ( phase array ) antenna and never before seen high throughput modems by the millions to satisfy the pent up consumer demand that now salivatingly awaits their arrival . GILT has a history of cutting edge development in satellite communication and SpaceX may be their prime suitor . To many have underestimated SpaceX ability to make things happen and this could well be another example.

Carbon Bigfoot
Guest
Carbon Bigfoot

NOT SO FAST. On Friday 17JAN20, the FCC and telecoms were sued in DC District Court to recover a HALF TRILLION DOLLARS in one of the biggest accounting scandals history.

Ghebre Ogbalidet
Guest
Ghebre Ogbalidet

Kindly share the link of the story

Bambam man
Guest
Bambam man

I’ve never heard of this

TexasStud66
Guest
TexasStud66

This has a very little, if any, effect on any foreign based company ! And, even were it true, that could
be tied up in Courtrooms for many years prior to
a court verdict!

Carbon Bigfoot
Guest
Carbon Bigfoot

Texas Stud read about how Verizon paid dearly for this scam:
https://medium.com/@kushnickbruce/score-verizon-ny-settlement-fiber-optics-to-underserved-areas-repair-of-the-state-utility-a7e468599017
Was not in court that long once the lawsuit was filed

Carbon Bigfoot
Guest
Carbon Bigfoot

Further (I fat finger my entry) Over the last 5 years, the IRREGULATORS, a consortium of senior, independent experts, forensic auditors and lawyers was formed. Working together they uncovered a massive financial cross-subsidy scheme, and it was done by manipulating the FCC’s cost accounting rules being applied to the state-wired telecommunications public utilities controlled mostly by AT&T, Verizon and Centurylink. 5G is the newest in a long line of tech services that are supposed to change our lives for the better. Truth is, 5G is really designed to get rid of the wired regulations and obligations, and have wireline phone… Read More »

Carbon Bigfoot
Guest
Carbon Bigfoot

On Saturday January 25, 2020 the 5G Space Appeal Petition, which I, along with almost 200,000 other engineers, doctors and scientists signed , will be delivered to World governments and the first attempt to stop 5G in an organized protest. https://stop5ginternational.org/5g-protest-day/. The health effects of 5G will include skin carcinomas and blindness., and when combined with 2,3 &,4G will significantly increase the 36 diseases of the Digital Age. In a process which is triggered by microwave radiation, i.e., EMI/RF/EMF, and millimeter waves will initiate calcium loading through VGCCs creating Oxidative Stress and Peroxynitrite the compound that is consistent with all… Read More »

Len
Guest
Len

Just as many “scientists” signed petitions regarding global warming and most of them wouldn’t know science if it bit them in the rear. In other words …BFD.

Carbon Bigfoot
Guest
Carbon Bigfoot

Are you suggesting that 31,000 science professionals who signed the http://www.petitionproject.org/ who objected to the Gas of Life, carbon dioxide a detriment to the climate? I signed it with the likes of Edward Teller.
What are your qualifications–other than your big mouth?

Ken
Guest
Ken

My qualifications are 70 years of change. The weather changes all the time. If you need a PhD to figure that out you are far behind the curve.

danscot
Member
👍3
danscot

Well Len/Ken you are right saying you don’t need a PhD in seeing the real weather changes just look at Greenland and/or Antarctica as an Ice Cube they are both melting away at an alarming speed ”Antarctica logs highest temperature on record of 18.3C” don’t take my word it here is the link https://www.bbc.co.uk/news/world-51420681

Carbon Bigfoot
Guest
Carbon Bigfoot
kadota1
Member
👍19
kadota1

Neither are you mr boastful!!!

Waters
Guest
Waters

They once raised cattle in those areas until it got too cold. I think it is cyclical

Chris
Guest
Chris

There is a cycle that happens every 60 years.in the last cycle we see the temperature rising by 1/1000 of a degree…oh! Let’s talk with Alarmists about the enormous investments until 2030 …

toto
Member
👍8
toto

Are you aware of why Greenland was called Greenland in the first place?

kadota1
Member
👍19
kadota1

Point is what caused it. Volcanoes distribute more crap into the atmosphere than people. This has all been going on since the planet was brought to life. Who was it algot gored who said we would be dead 10 years ago? Get a life DA! I’m a scientist through education but a long interruption due to vietnam in B-52s for a career and so called scientists have no individual minds nor integrity the bingo head above demonstrates that. They use the gangbang theory of pilling on so no one is left on the outside and they are all together, At… Read More »

madmax3.6
Guest
madmax3.6

Don’t forget Al Gore is still looking for man-bear -pig.

TheMerlin
Guest
TheMerlin

Thanks for your service. The Climate thing all depends on what business you are in. Al Gore became a multi-millionaire from his Climate Change endeavors. A lot of money being spent on a theoretical posit. It’s like the MSM…whatever fits their narrative. There are several models all of which produce different results…so the CC zealots use the models that fit their narrative.

freeindeed
Member
👍28
freeindeed

31,487 American scientists have signed the petition project.org stating there is no convincing evidence that humans can or will cause “catastrophic” heating of the atmosphere. And that more CO2 in the atmosphere is shown to have positive effects on plants.
We the people will not believe left wing science because “you told us so” or because of your “superior intellect”.
When “superior intellect” lacks good sense we know who we cannot trust in.
Oh by the way these “global warming scientists” enjoy the government money flowing in as long as they support the misguided theory.

Bud
Guest

This is a must read for anyone has made up their mind as to the cause and solutions of Climate change. The assumption that the problems is anthropogenic is too simple. The groups of “Scientists” who have made proclamations as to the precise source of our travails and “Existential threat” are making many assumptions and simplifications. The causes and solutions if not also the threat itself need to be examined before submitting our lives and country to government’s final solution.
https://earthobservatory.nasa.gov/features/OceanCarbon

gaicecoach
Member
👍8
gaicecoach

Thanks for sharing. That was a very informative read.

frankw17
Member
👍1317

It was indeed informative Bud. Has there been any further work re. the effects of stratification? The reason I ask is that this paper is dated 2008.
Regards,
Frank

Bud
Guest

There is more information, maybe not quite as authoritative, on the site’s Blog and Blogroll under Climate Change Q&A

Dave H.
Guest
Dave H.

Snopes analyzed the 31,487 signatures petition and declared the petition to be “Mostly False”. https://www.snopes.com/fact-check/30000-scientists-reject-climate-change/

wayne
Guest
wayne

Fact Checkers – Snopes started by Barbara and Michael Mikkelson from San Fernando Valley, the couple fell out, Barbara accused David of spending 98k on prostitutes, which is probably true because he divorced Barbara and he married Call girl and Porn Star Elyssa Young, AKA Erin O’Bryn who is now Snopes’ administrator. Snopes only fact checker is Kim LaCapria also known as sex and fetish blogger Vice Vixen. That my friends is ‘fact checker’ SNOPES. There are no researchers, no investigators, no lawyers, no documents to support their findings and they are strongly politically biased yet they are accepted as… Read More »

Dave H.
Guest
Dave H.

None of the ladies names you list above are listed on the Snopes “Our Team” . That page does list several people who appear to be capable of fact checking. https://www.snopes.com/snopes-staff/

wayne
Guest
wayne

Go a little deeper with your research on David Mikkelson – not credible in any way.

jbmaverick
Irregular
👍2
jbmaverick

Snopes, like virtually all the “fact check” sites (like “Politifalse”), is a joke. They’re all propaganda sites, mostly for the Left, and likely less reliable as fact checkers than just asking your grandmother.
As the post above indicates, look into who owns/runs the sites to get an idea of the truth.

kadota1
Member
👍19
kadota1

And snopes has been declared that also. Like wikipedia with the one sided slant. All of these sources are like our media. That says it all!!

rob
Guest
rob

Nice discussion of some scientific consensus studies on climate change/warming: https://www.youtube.com/watch?v=ewJ6TI8ccAw

TheMerlin
Guest
TheMerlin

As I said, it’s all about making money…so you are 100% correct. And no one wants to say anything against it…such as businesses who depend on customers…customers who are paranoid about CC.

Bren
Member
👍73
Bren

Don’t worry, 5G is good for you – that’s the way the Russian government have been playing it for their people.

Meanwhile, in the West, they spread FUD, presumably to slow down our progress. See the New York Times article: https://www.nytimes.com/2019/05/12/science/5g-phone-safety-health-russia.html

More worryingly, I was more than a bit annoyed to see that Russia is also spreading anti-Vaccine propaganda. The sicker we are, the happier they are, I guess…

kadota1
Member
👍19
kadota1

ny times, the mouthpiece of the fringe left is as believable as david “right here” muir the RA guy and his colleagues.

Bren
Member
👍73
Bren

I’ve been reading bits from the NY Times for a few months and they seem to be Centrist, at least from a European perspective. Perhaps that translates as fringe left in the US?? Probably not.

No idea who Dave Muir is. No time to Google it!

It looks like the US is the target of misinformation campaigns designed to slow technology adoption and kill their kids by removing vaccine protection. I would be annoyed if I were you…

Carbon Bigfoot
Guest
Carbon Bigfoot

Bren you are horribly misinformed. Numerous lawsuits are pending. Environmental Health Trust has just filed theirs against the FCC with information you need to read and understand:
https://ehtrust.org/ehtlegalaction-againstfcconhealtheffectsofcellphones/

Bren
Member
👍73
Bren