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5G and value update +2

08:27 15-Oct-19


While we wait for something meaningful to come out of the Brexit push, I'll take some time to update on the progress of telecom and 5G.  In general, the U.S. isn't getting all that much traction, as Germany decides to do its own case by case vetting.  India, which will hold its 5G auctions by March, is also in talks with Huawei.  There are some pockets of resistance, but it looks like the only major markets where Nokia, which has filed its 2000th 5G patent, will have a protected inside track are America, which begins its own auction on December 10th, and Australia.  Even so, I think NOK is at least slightly undervalued, especially in advance of the imminent dividend.

In preparation for the 5G ramp, Vodafone continues to cut employee costs in Germany and Australia.  More important is the long-awaited capitulation of Jio, in India, on its promotional pricing.  This shows that India's byzantine regulatory structures are a double-edged sword.  The same goes for EbixCash, which is not yet exposed to India problematic banks, but could eventually be part of the emerging solution if it can integrate with India's UPI (unified payments interface).  To that end we will want to watch the value of the PhonePe spin off, as well as the clock.  With the next VOD dividend just over a month away, I'm holding shares of both VOD, as they appreciate, and EBIX as they flounder.

We also got word from Resonant this morning about receiving its first royalty prepayment for 4Q19 work to be done with Murata.  RESN has languished of late, and is now 15% below my $3.35 minimum price target.  This may be due in part to a short piece on SA, which is right in saying that Resonant has over-promised and under-delivered to date.  However, volatility like this is normal for thinly traded GRoDT stocks.  I think the company does have a technological edge and that it makes sense to cautiously accumulate RESN at these levels.

Finally, I've also been putting a lot of time into investigating yesterday's 6%+ drop in CVA.  It's always possible that there's some development I'm unaware of, but the move seems to be primarily options-related short selling, which would make this a minor buying opportunity, despite the unappealing macro environment.  Invest carefully!