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Chris DeMuth Jr.
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"It's not given to human beings to have such talent that they can just know everything about everything all the time. But it is given to human beings who work hard at it - who look and sift the world for a misplaced bet - that they can occasionally find one." - Charlie Munger I look... More
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  • Seeking Truth From Facts – Tuesday, September 10, 2013 23 comments
    Sep 10, 2013 9:44 AM | about stocks: GSAT

    The FCC is circulating the Globalstar (OTCQB:GSAT) Notice of Proposed Rulemaking. We expect FCC approval. If approved by the FCC, this spectrum could be used for long term evolution (LTE) services. Utilized for Wi-Fi, GSAT spectrum could be worth around $3 per share. The market for spectrum is consolidating. Here is GSAT.ob since the announced LEAP acquisition:

    (click to enlarge)

    Disclosure: I am long LEAP.

    Additional disclosure: Chris DeMuth Jr is a portfolio manager at Rangeley Capital, a partnership that invests with a margin of safety by buying securities at deep discounts to their intrinsic value and unlocking that value through corporate events. In order to maximize total returns for our partners, we reserve the right to make investment decisions regarding any security without further notification except where such notification is required by law.

    Stocks: GSAT
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Comments (23)
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  • Wilson Wang
    , contributor
    Comments (900) | Send Message
     
    Jesus! A triple?
    10 Sep 2013, 09:49 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (6796) | Send Message
     
    Author’s reply » It needs FCC approval first and optimization of the use of this spectrum, but yes, a triple. Incidentally, one of the Rangeley Capital partners used to be their CFO.
    10 Sep 2013, 10:00 AM Reply Like
  • Wilson Wang
    , contributor
    Comments (900) | Send Message
     
    Very interesting. Thanks for sharing this with us!
    10 Sep 2013, 10:05 AM Reply Like
  • bazooooka
    , contributor
    Comments (3624) | Send Message
     
    I'd counter by suggesting that the LEAP triple off the recent low might be a sideshow to the 10 bagger potential of GSAT off its Spring time lows if all goes to plan. I always seem to be underinvested in these deals though =)
    10 Sep 2013, 10:59 PM Reply Like
  • Special Situations and Arbs
    , contributor
    Comments (1015) | Send Message
     
    Chris,

     

    What valuation have you applied to the LEAP CVR? I find it really hard to value.
    10 Sep 2013, 12:45 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (6796) | Send Message
     
    Author’s reply » We don't know, but the dynamics are quite unfavorable.
    10 Sep 2013, 01:24 PM Reply Like
  • Special Situations and Arbs
    , contributor
    Comments (1015) | Send Message
     
    I am long LEAP via the short 15 PUT. While I am hesitant to buy for CVR value I feel comfortable that the deal will go through
    10 Sep 2013, 02:05 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (6796) | Send Message
     
    Author’s reply » That is just what I think and coincides with how we set this up.
    10 Sep 2013, 02:13 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (6796) | Send Message
     
    Author’s reply » Globalstar Spectrum Seen Turning Into Deal Gold: http://bloom.bg/167i0iw
    17 Sep 2013, 11:49 AM Reply Like
  • bazooooka
    , contributor
    Comments (3624) | Send Message
     
    Chris is this a big or small position for you? I also like GSAT and am thinking about buying more but don't like to when its on the move. Do you plan on holding for a spectrum sale or would you scale out just on the anticipation of such an event as it approached $1.25+ as suggested in the article (although that may be low by $1 or 2 based on other analysis).
    17 Sep 2013, 09:35 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (6796) | Send Message
     
    Author’s reply » 1.) Small 2.) I am price-sensitive in all things, so that if a position converges on where I see value, I sell regardless of whether or not the anticipated event actually happened or not.
    17 Sep 2013, 09:40 PM Reply Like
  • bazooooka
    , contributor
    Comments (3624) | Send Message
     
    If one sees a deal fall through as taking the stock back toward 60 cents then I'd suspect you'd have to have high conviction to hold if the current run takes it much further above $1. The risk/reward if things were to break bad would mean that one needs to think there is better than 60 cent upside and above 50% probability of a sale to stay long if/when it hits $1.25.
    17 Sep 2013, 10:19 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (6796) | Send Message
     
    Author’s reply » Yep; that is what the math says.
    17 Sep 2013, 10:45 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (6796) | Send Message
     
    Author’s reply » FCC Releases Proposed Rules For Globalstar Terrestrial Broadband Services Over 22 MHz Of Spectrum: http://bit.ly/1hdoUXS ($GSAT); +25% pre-market.
    4 Nov 2013, 09:16 AM Reply Like
  • Spidron
    , contributor
    Comments (27) | Send Message
     
    Made a few bucks on GSAT but bowed out not too long ago. What gave me pause was:

     

    (i) There were warrants for ~119 million shares outstanding (maybe fewer now) - all well in the money, as I recall.

     

    (ii) I believe that in their petition to the FCC, GSAT made the argument (albeit a self-serving one) that it was uniquely positioned to manage TLPS interference with its satellites, suggesting that an acquirer might have to want to be in the satellite business as well. This might depress the value of GSAT's spectrum relative to that seen in other recent sales/acquisitions. (The existing satellite business is, of course, a matter of regulatory concern: and I don't see that business as being worth that much considering existing debt and required capex going forward.)

     

    My valuation did not include any incremental value for possible future LTE development involving the lower Big LEO band as well, since I saw that as too uncertain given GPS interference issues, likely time frame and more spectrum coming online via, e.g., the TV broadcasters.

     

    Throw in the regulatory uncertainty, and I got cold feet. I may very well have been to timid here and may reconsider. I sold Clearwire too early, too.
    4 Nov 2013, 03:43 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (6796) | Send Message
     
    Author’s reply » Selling too early is a high class problem. We can go sailing someday and tell each other sad stories over cocktails about how much richer one could have been were it not for selling too early.
    4 Nov 2013, 03:48 PM Reply Like
  • Spidron
    , contributor
    Comments (27) | Send Message
     
    Yes, I do console myself by recalling that Baron Rothschild once said that the secret of his wealth was always selling too soon.
    5 Nov 2013, 01:40 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (6796) | Send Message
     
    Author’s reply » This (OTCQB:GSAT) price makes much more sense to me.
    7 May 2014, 09:33 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (6796) | Send Message
     
    Author’s reply » (OTCQB:GSAT) hits a new 52-week high.
    9 May 2014, 01:43 PM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (6796) | Send Message
     
    Author’s reply » (OTCQB:GSAT) at a new 52-week high.
    23 May 2014, 09:32 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (6796) | Send Message
     
    Author’s reply » (OTCQB:GSAT) hits a new 52-week high today.
    29 May 2014, 03:33 PM Reply Like
  • bazooooka
    , contributor
    Comments (3624) | Send Message
     
    Nice...It did indeed 10 bag off the Spring 2013 levels.
    3 Jul 2014, 01:41 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (6796) | Send Message
     
    Author’s reply » So far so good...
    3 Jul 2014, 08:24 AM Reply Like
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