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I am a portfolio manager at an event driven hedgefund based in Los Angeles.
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  • BUY SIGA
    SIGA recently won a contract worth approximately $500mm or roughly $6/share discounted for time value but lost the contract for the additional 12mm doses worth up to $19/share after a legal battle with one of their major competitors and scrutiny from the government. After the news was announced the stock dropped more than 30%. It seems now that the market is undervaluing the probability that they win the additional 12mm doses, as they are only attributing $2 of value to the potential $19 contract win. This is completely unrealistic given that there is only 1 possible competitor and SIGA is still by far the front runner for winning this contract. Conservatively, the market should be attributing a 25% weighting to winning 6mm doses ($2.38), and a 25% weighting to winning the full 12mm doses ($4.75), and 50% weighting that they do not win the contract at all. That get us to a value of about ~$13/share a 62% premium to today's trading price. 
    Tags: SIGA
    Jul 25 12:30 PM | Link | Comment!
  • LONG TZOO
    Wrote this yesterday night:
    TZOO did worse than I had expected, but honestly I shouldn't have been
    surprised at all given I didn't think core business was growing and local
    deals didn't look like it was bringing any more than $9.5mm.

    stock feels cheap, here are a few things I found interesting in the quarter

    -first uptick in subscriber growth in 6 quarters (by uptick i mean
    increasing growth, was 13.1% YOY this quarter, last quarters respectively
    were 11.8%, 12.5%, 12.5%, 14.7%, 20.4%). Clearly this is a positive, but
    more likely due to their broadcasting spend that hit eps this quarter.
    Nevertheless, positive for the stock in future qtrs.
    -first downtick in cash in 8 quarters (around $40mm). This company has
    historically been underspending on SG&A and my hope as a LT investor is that
    these guys don't underspend because the street hit them for this. I view
    this as a growth company, I would hope the sell side analysts get smart and
    bring down eps estimates, they are all valuing this on a sales multiple
    anyways.
    -sales and marketing grew at the fastest rate since Q1 2008 and expenses are
    clearly hitting EPS, same point as above.
    -core business was up 1% yoy and down sequentially, this is the worst
    performance by their core business since Q4 of 2008 and this is the reason
    they missed. I see this clearly as local deals cannibalizing their core
    business. I don't think think this is necessarily a bad thing as local deals
    are a higher margin business (and a higher multiple business) and still
    growing much faster than their core business is declining.
    -Important to note that they expanded into 27 markets in the quarter, much
    faster than the 18 they had done in the last 2 qtrs and the 15 they had
    projected to do.

    stock is now trading at around 30x 2012 eps, and around 47x ltm eps
    (adjusted for the .07 dilution from broadcasting expenses this qtr), they
    are growing top line at an accelerating 34% yoy, and eps by 87% this qtr,
    144% last qtr. I'm a buyer at these levels, I like the growth profile of
    this company and I think this compares favorably to NFLX who trades at
    around double the multiple and is much much larger.
    Tags: TZOO
    Jul 22 10:45 AM | Link | Comment!
  • Selling JNPR
    Been slowly selling off my JNPR position, I thought this whole european mess was a headfake after ADBE missed on Europe but since then we've seen softness in EMEA from FTNT, RVBD, and FFIV. These 3 companies are highly levered to JNPR's businesses switch, router, and security. I think Kevin Johnson (JNPR's CEO) had something in mind when he mentioned that this year would be back end loaded, and maybe that was the precursor for the rest of these companies announcing terrible results. I would most likely stay out of the way when JNPR reports, as strong secular results could lead to a massive upside move but they are more likely to miss in the near term and come off slightly given much of the downside is priced in. If JNPR comes off after earnings I would be a buyer given their strong pipeline of products coming in 2012, but it seems that everyone else would already agree with me on that one.
    Tags: JNPR, FTNT, RVBD, FFIV
    Jul 21 5:42 PM | Link | Comment!
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