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Analyst and Fund Manager with almost 20 years investment experience. Coverage includes a variety of industries, with a focus on technology. Particularly focused on value stocks, poorly understood or under-followed situations, and contrarian perspectives. Primarily invest in special situations... More
  • OTIV: 11 Questions That Will Set The Direction For Our Top Pick Of 2014 1 comment
    Nov 25, 2013 8:38 AM | about stocks: OTIV

    When On Track Innovations (OTIV) reports 3Q results tomorrow pre-open, we'd expect the audience to be much larger than for prior calls due to the plethora of recent news, as well as our recent Alpha-Rich article. OTI remains our top-pick for 2014 despite it's 30%+ move since our write-up.

    On the last call, there were no analyst questions. However, OTI CEO Ofer Tziperman used the call as an opportunity to address a variety of questions he had received from investor (2Q transcript here).

    We're not sure if OTI management will take live questions tomorrow, so we have prepared 11 questions we feel are key to understanding the direction and potential of OTI in 2014 and beyond.

    1. Can you size the NFC payments market opportunity, and your expectations of how the growth curve will look (i.e. acceleration/deceleration in 2014/15, etc.)?

    2. If you win your fair share of the NFC payments segment, what would that imply in terms of growth rate?

    3. How meaningful is the recent certification of OTI's Wave device by Mastercard (MA), and what has been the market response to this development?

    4. In the press release announcing Mastercard certification, there is a quote "We expect other major payment companies to follow suit and provide certification in the near future." Can you provide a sense of timing and explain the impact on your market opportunity if others follow suit?

    5. Could you discuss how we should think of the Wave? While Square has obviously achieved massive success/adoption with its device (and a $4+ billion private valuation), do you believe OTI, with ~$100 million market cap, 100+ patents, extensive bank/payments relationships, and 20 years of development has a similar opportunity?

    6. It appears that your parking segment is seeing acceleration, how should we size that opportunity and think of its growth rate?

    7. It appears that your petroleum segment is seeing acceleration, how should we size that opportunity and think of its growth rate?

    8. How should we size the potential damages you will be looking for in the upcoming trial with T-Mobile, especially in light of the positive Markman ruling?

    9. What is your strategy if the current SmartID sale is not consummated?

    10. Based on you model, do you anticipate EBITDA profitability sometime in the next few quarters, and for 2014 as a whole?

    11. Given what appears to be a very exciting story in its very early stages, have you been in touch with any sell-side analysts, and would you anticipate research coverage in 2014?

    We think these questions are just the tip of the iceberg, but will provide an important sense of how 2014 and beyond will look.

    If you have questions, we encourage you to reach out to OTI's IR team. The can be reached at otiv@liolios.com.

    Disclosure: I am long OTIV.

    Additional disclosure: We conduct thorough research on our ideas, but our views are our own. Please do your own research.

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  • Thanks for the update. I took a small position after reading your initial article. And have loaded up further today after doing a bit of my own DD over the weekend. The exciting thing about OTIV is that they have multiple ways to win. Even if the patent litigation doesn't work out as anticipated (unlikely I think) things are looking very promising on the operating side. Lets hope we get some of the above questions answered tomorrow.
    25 Nov 2013, 08:22 PM Reply Like
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