I recently returned from a great meeting with the Oculus management team,. Here are a few of the highlights:
I was once again impressed with the quality of the team that the CEO has put together. I was reminded of the fact, that all of these guys come from backgrounds of successfully building startup companies. This is not their first endeavor. They have learned and grown from previous efforts, and are applying what they have learned to this company.
During this trip, I was able to take a tour of the manufacturing and administrative facility. It turned out to be much more impressive than I imagined. Many of the startups I have been involved with, were pretty rough around the edges in the early stages. That is not the case with oculus
We walked around and poked our head in various doors, and one thing that surprised me was the number of laboratories. It seemed like every room, I looked in, had someone in a white lab coat, performing some sort of a high-tech bioengineering task. There was one very large room that was sealed off, and I was told that not even the spouses of management were allowed in there. This was the room that housed the machines that creates the Oculus products. There were no armed guards standing around, but you certainly got the feeling that it was a very secure room. I am sure the competition would love to spend a couple of hours in there.
There were two main bottling facilities, one for the gel and one for the liquid. The machinery was impressive and modern, and I can see why the FDA is very pleased with this facility.
One area that was particularly impressive was where they stored their inventory. There were these huge containers full of the Oculus products, ready to be shipped. I was surprised by the sheer volume that was being produced, and of course eventually sold.
During my meeting with management, a couple of things stood out. I didn't realize this, but they have been traveling to New York and meeting with institutional investors, the goal being to make these large investors aware of Oculus and it's future potential. Since it is institutional investors that move stock prices, this is a good thing in the long run for shareholders. On those days when millions of shares are trading hands, you can be sure the institutions providing the bulk of the trading.
The other thing I was reminded of is that this is a company that works very hard at projecting low and delivering high. They consistently meet or beat guidance, and that is a result of carefully giving guidance that is conservative and well thought out. In terms of the 2013 $45-$60 million revenue, I was reminded that this is a projection based on existing revenue streams, and does not include any future revenue streams. In other words, the $45-$60 million guidance is conservative. There is a good chance they will beat that prediction.
Here is what I walked away with after this meeting. Management is exceptional. They have a real business producing and selling a successful product. In my opinion, they have at least an 80% chance of success. As with all startups, things can go wrong, but this company has so much going for it, that even with a view missteps, their success is likely. The opportunity to get in under two dollars a share, provides huge upside potential.
Disclosure: long OCLS