MagicJack Jumps as Tilson Predicts Netflix-Like PotentialElena Popina
MagicJack VocalTec Ltd., whose founders pioneered voice-over-Internet technology, jumped the most since 2010 after hedge-fund manager Whitney Tilson said the stock has the potential to emulate the eightfold rally in Netflix Inc.
Tilson said his firm owns more than the 0.9 percent stake in MagicJack reported in a Dec. 31 regulatory filing, without specifying the size of it. Shares of the Netanya, Israel-based company jumped 18 percent to $16.25 in New York, the most since September 2010. Trading volume was almost five times the average volume of the last 90 days, according to data compiled by Bloomberg. The stock extended this year’s gain to 36 percent.
Tilson, the managing partner of New York-based hedge fund Kase Capital Management, said MagicJack’s marketing push could result in rapid subscriber growth and stock appreciation, according to a note to clients dated yesterday. Los Gatos, California-based Netflix, the world’s largest subscription streaming service, surged 691 percent since Tilson pitched the stock 16 months ago, he said.
“It doesn’t necessarily have to have a Netflix success story to succeed, but, as Netflix, is has an enormous potential for growth,” Tilson, who oversees $70 million at Kase Capital Management, said by phone from New York yesterday.
“MagicJack is in a unique position to deliver the two things consumers want the most: value and mobility,” Chief Executive Officer Gerald Vento wrote in an e-mailed message following Tilson’s call.
Phone calls to Jonathan Friedland, a communications manager at Netflix, requesting a comment on Tilson’s note wasn’t returned.
Short sales against the company soared to a record 15 percent of shares outstanding on Dec. 25, up from a 2013 low of 8 percent in September, according to Markit, a London-based provider of financial information services. Bearish bets on the stock were 12 percent on Feb. 7, which compares with an average of 3.9 percent for companies in the Russell 2000, Bloomberg data show.
Netflix rallied 298 percent last year, its biggest annual gain in a decade.
“The sky is the limit for the company and the stock,” Tilson wrote in yesterday’s note. “This is the kind of growth story that investors could really fall in love with.”