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The “CALL’ to start 2013

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I can't think of a better way to kick off the New Year, then with a stock starting 2013 with a new CEO at the helm. Magicjack Vocaltec LTD(CALL) announced it's Founder and CEO Daniel Borislow will step down on January 1st, 2013 and be replaced by Gerald T. Vento as President and Chief Executive Officer. While Daniel was able to grow the company to nearly $140 million in revenues, while also growing earnings each quarter, the investment community never seemed to be a fan. His antics as CEO as well as behind the scenes was enough for folks to look for other places to invest their money. The lack of confidence was never more evident then in the unrelenting shorting of the stock to the tune of 5.7 million shares, which is nearly 59% of the available shares, an all-time high.

Folks could also make a case that investors were betting on growth to slow or decline for Magicjack Vocaltec LTD(CALL) in the coming years, yet they continued a trend of raising guidance. On Friday, December 28th they raised fourth quarter EPS guidance from fifty cents to seventy cents, a 40% increase. The company continues to grow revenues at a 20% clip, earnings at a 30% clip, are debt free, and have been using some of the $40 million in cash and investments to buyback the stock, taking nearly 500,000 shares off the market in 2012.

All the above are great catalysts for an upward move in the stock. While still up 30% in 2012, the stocks close of $18.20 was well off it's high 28.22. I think the change of guard at the helm will be the catalyst needed to push the stock over $30 in the short term.  Here is an excerpt from the press release on Friday about the new CEO Gerald T. Vento:

Mr. Vento is a seasoned telecom executive with more than three decades of experience and a strong industry track record.  Notably, he founded TeleCorp PCS, Inc., a public U.S. wireless services company, in 1996. As Chairman and CEO, he grew TeleCorp's annual revenue to $1.1 billion and sold the company to AT&T Wireless for $5.7 billion in 2002.  Mr. Vento has been a Director of magicJack since 2008 and became Chairman of the Board in April 2012.  In connection with Mr. Vento's new role, current Board Member Donald Burns, also an experienced and successful public telecom company founder and CEO, will assume the role of Chairman of the Board.

 

Mr. Vento brings credibility to the company, and I think the stock price will start to echo that. Investors betting on a failing story have it wrong, and will be forced to cover their shares, causing a quick move over $20 in the coming days. One only needs to look at Boston Beer Co (SAM) to see what happens when folks take large short positions and have it wrong.

 

 

 

 

 

 

 

 

 

 

We had Magicjack Vocaltec LTD(CALL) in our watchlist pre-market Friday and currently hold Jan $20 and $22.50 calls. We like Magicjack Vocaltec LTD(CALL) for a move to $20.75 in short order.

 

12-20 Watchlist

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What started off as a solid green day, ended deep in the red, as folks used the fiscal cliff to take profits. I said it yesterday in the watchlist, that this rally has even surprised me. Days like yesterday can make some folks worry, but if you look at the SPY chart, it looks like a healthy pullback. I still like us higher before the years out, and will keep playing it that way.

 

We had weekly jobless claims rise 17k but GDP was revised up from 2.7 to 3.1%. Should be enough to keep us flat or green today.

 

Yesterdays BBBY earnings play and MLNX bounce not working and my 67.50 C’s on BBBY and 70/72.50 on MLNX will probably expire worthless. SINA 52.50 calls finally started to work yesterday as the ones alerted at .14/.17/.20 hit .70 yesterday before the stock pulled back. I still like that one for $53 before the weeks out.

 

SODA continues to defy gravity, we added JAN 52.50 @ .50 yesterday and will continue to look to add to the warchest. Still holding some SAM 140 calls and added 145s @ .20. Citi started coverage on a bunch of beer compnaies to include SAM this morning. The rating is neutral but it is substantially higher then any other target at $152, so lets see if this puts fire back into the stock.

 

MAKO is the one I will be looking for some calls on at the open. This one has been hot and cold for us, but looks like this could break a few days, and the 17.50 JAN calls are only .15. Piper came out with positive comments this morning so may get some more legs.

 

Here are some of the analyst upgrades/downgrades this morning:

 

(SAM)

Boston Beer initiated with a Neutral at Citigroup

Target $152.

 

(FCX)

Freeport McMoRan upgraded to Buy from Hold at Deutsche Bank

Deutsche Bank upgraded Freeport McMoRan citing the recent pullback in shares and keeps a $40 price target for the name.

 

(BBBY)

Bed Bath & Beyond price target lowered to $65 from $75 at Deutsche Bank

Deutsche Bank lowered its price target for Bed Bath & Beyond following the company's Q4 results, but maintains a Buy rating on the name. The firm says the quarter was no worse than expected and that consensus estimates were too high.

 

MAKO)

MAKO Surgical survey shows solid utilization trends, says Piper Jaffray

Piper Jaffray said its survey of existing MAKO Surgical sites indicates continued solid utilization and satisfaction with the Rio robotic arm surgical system. Piper said it has greater conviction in MAKO following the survey and reiterates an Overweight rating on the stock with a $28 price target

 

Here is the options I am watching at the open:

 

 

Stock Ticker Call/Put Strike Expiration Closing Price
MAKO CALL $15.00 weekly 0.05
MAKO CALL $17.50 JAN 0.15
BPT CALL $70.00 weekly 0.20

 

 

It is a short list today, but will post any other trades via the chatroom and twitter feed.

 

Lets have a great day folks!

 

- Jimmybob

12-18 Watchlist

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First off, the site is moving quickers as we upgraded our server, but we did have some temporary issues so apologize in advance for any troubles accessing the site. Now on to the fun:

What a great start to the week as a few of the plays on watch from last week continued to ramp higher, and others started their advance. SAM continues to move, marking its 3rd consecutive day of gains closing right near the high of day on huge volume. SODA finally broke the $43 resistance on amazing volume as well with NO NEWS. Seems to be more optimism on this fiscal cliff fiasco getting resolved so futures are solid green. If you were in the chatroom or on the week ahead class you heard quite a bit about japan and the oncoming currency wars coming in 2013. The clowns on tv are still talking about QE, and I think that term will be replaced by another coined phrase in regards to currency. We shall see.

 

Going forward I will try to include meaningful upgrades and downgrades, most from fly on the wall.

 

Here are todays:

 

GS (GS)

Goldman Sachs upgraded to Positive from Neutral at Susquehanna

Susquehanna believes Goldman is well positioned to benefit in fixed income from potential rising rates due to a fiscal cliff resolution and expects the company to gain share in FICC due to reduced competition. Price target raised to $149 from $127.

 

AMZN (AMZN)

Amazon.com price target raised to $300 from $250 at RBC Capital

After conducting checks, RBC Capital believes that Amazon.com's investments in fulfillment centers could begin to slow in 2013. The firm maintains an Outperform rating on the stock.

 

AAPL reiteration from BofA : (AAPL)

Apple sell-off on supply chain concerns overdone, says BofA/Merrill

BofA/Merrill believes the sell-off in Apple due to supply chain concerns is overdone and that valuation is at trough levels. The firm trimmed estimates but notes supply chain adjustments are common and recent supplier production cuts come after peak production ramps and double ordering. Shares of Apple are Buy rated with a $720 price target.

 

Here are the positions I am looking at for open:

 

 

Stock Ticker Call/Put Strike Expiration Closing Price
CMG CALL $305.00 weekly 0.45
SINA CALL $52.50 weekly 0.21
MON CALL $92.50 weekly 0.13

 

I kept saying CMG would break out last week but that never happened. Yesterday was the start of what I think is a 2-3 day run for CMG over $300. Still love SINA for bounce over 50, and MON to $93 or so this week.

 

Lets have a great trading day!

 

- Jimmybob