IncrediMail Buying Opportunity: Stock Sales Misjudged

The market puked yesterday on news that Ofer Adler, CEO of IncrediMail (MAIL), and Yaron Adler, Board Member, both sold stock in the last month. In fact, Yaron Adler sold a lot of stock, two-thirds of his holding.

As MAIL's share price is off 20% since its peak and is off almost one dollar as of this writing, I think a little perspective is in order.

1. Yaron Adler has not been actively involved in the company for a long time. Despite being on the board, based on all the data I have collected, he is not involved. As the stock price appreciated, Yaron had a chance to take cash off the table and further disassociate from the company, and he did. Further, Yaron Adler is up for re-election as a director at the next elections (end of year, I believe). I would not expect to see him back on the board after the election.
2. Ofer Adler sold $3.6MM worth of stock, or some 350,000 shares. Ofer Adler purchased double that amount of stock when the stock was in the two dollar range with cash out of his pocket ($2.1MM worth of cash). By taking roughly $3.5MM off the table he took approximately a $1.5MM profit on a bold move he made 6-12 months ago, when he showed confidence in the company. He remains by far the largest shareholder with almost 19% of the company and is well incentivized to make the company successful for the long term.
3. Ofer is a smart guy. There is no way he would have sold the stock and replenished the out-of-pocket money he laid out if he did not believe the company was on target for its numbers. The company has a 12 month history of conservative projections and he is not going to mess up the long term trajectory for a $3MM stock sale. I believe that the hope of economic recovery has led to a stabilization in Google's (GOOG) CPCs and that MAIL's Hiyo IM product is beginning to scale.

All this leads me to believe that the Street has misjudged this and that this is another buying opportunity in MAIL.

Disclosure: Long MAIL

Comments

[spider42000]

Stop whining

2009 Sep 15 03:20 PM

[Envoy Global Research]

Good points.

It's also worth mentioning that as Yaron sold, SPROTT ASSET MANAGEMENT LP out of Canada, a highly respected fund, picked up a 5% position in MAIL.

Also, I don't think Wall Street is misjudging MAIL, as I believe few on Wall Street even know about this company yet, as indicated by the extraordinary low valuation and lack of analyst coverage. Incidentally, MAIL management has only recently started to talk to the Street.

Notably, Google hit a 52-week high today. MAIL is basically a "distributor" for Google. With Hi-Yo gaining traction and the new version of Incredimail now out, it is very likely that MAIL will continue to surprise on the upside.

2009 Sep 15 10:14 PM

[KDG]

The significant change into the black for EBITDA with total current and long assets improving from 12/2008 to 3/2009 would suggest a niche revenue space is moving from speculative to fruition.

Concerted virtual Ad revenue is serious $$ and the question of 'how' is a legit business model. My friends husband is very much in a similar venue, different boat- this is one area where news could outpace rumors in a hurry.

2009 Sep 17 05:07 PM

[Silverfox2]

If you like MAIL, you will love Vertro, ticker VTRO. It's cheaper, with a very similar business model. Based in NYC, not Israel, and it has a corporate level relationship with Google US. Very high quality traffic and it's tool bar is very easy to remove if you desire. Unfortunately, I can't say the same for MAIL's software, which I hear doesn't make GOOG too happy.

2009 Sep 19 02:55 PM