Vocaltec: A Company with Cash and a Growing Business in Emerging Markets

Includes: ANSW, CALL, PERI
by: Michael Eisenberg

Those of you who have followed my posts here, know that I have been focused on small caps where the market cap trades below cash value in the business. I have focused on a few Israeli small caps including MAIL and ANSW and a Tel Aviv Stock Exchange traded company called Babylon.

I have recently accumulated a position in Vocaltec (VOCL) for the following reasons:

  1. VOCL market cap is around $9MM and cash is approximately $9.5MM at a share price of $1.70. This means you get the revenues free, assuming that management is managing the burn rate effectively, which I think they are.
  2. Ido Gur, the company's CEO purchased shares on the open market. Mr. Gur is an accomplished executive with lots of telecom experience from his days at ECI Telecom (ECIL). I believe in his leadership and vision for the company.
  3. The Company is focused on selling its VOIP boxes in the developing world such as Brazil and Nigeria. The stock market under appreciates the growth in these market segments today and yet these are the markets that often make more sense than the challenged western economies for a small company.
  4. The core original VOIP technologist is still with the company as CTO. As a venture investor, I can tell you that this is key for a turnaround.
  5. VOCL has key channels such as IBM that provide leverage in the model.

I wish I had bought my large position back in May but I think this stock has legs.

Full Disclosure:
Long VOCL, MAIL and Babylon

P.S. I was unable to retrieve the conference call transcript from the VOCL website to quote from it.