Shares of Intelsat (NYSE:I) jumped 21% in early trading Wednesday after analysts at Kerrisdale Capital issued a series of tweets outlining its bull thesis for the satellite operator's stock. The shares have fallen back to a still-respectable 10.8% gain as of 11 a.m. EDT, however, as investors ask a very important question:
Does Kerrisdale Capital it know what it's talking about?
In a series of seven tweets posted on Twitter this morning, NYC-based Kerrisdale Capital argued that:
- Along with France's SES S.A., Intelsat is one of the two "largest players in the 3.7-4.2GHz frequency range" of broadcast spectrum.
- Both companies have more spectrum than they need, and can potentially free up and sell off "400 MHz of spectrum" over "a few years."
- That spectrum should sell for ">$0.50/MHz-pop" and be "worth $60bn+" in aggregate.
- And Intelsat's share of that loot should be enough to push its stock price up to $150 a share.
Intelsat sells for less than $19 per share today.
That all sounds pretty promising for Intelsat shareholders. Kerrisdale Capital is basically promising investors an eight times return on their investment in under two years if they buy Intelsat stock today.
One thing that might give investors pause before acting on Kerrisdale's advice, is an examination of the company's record as a frequent endorser, and detractor, of momentum stocks such as Northern Dynasty Minerals and QuinStreet Inc. When a smaller analyst makes extreme promises in the hopes of ginning up greed (or fear) among investors, it may be safer to ignore the hype, and focus on the numbers instead.
If you'd like to do that for Intelsat, you can start right here.