Archive for January, 2011
Happy New Year to the GrooveVC community. We hope that 2011 is as profitable for all of you as 2010 has undoubtedly been. Our two focus companies (ATRN and VTRO) are performing well by all available measures, but most importantly, each is trading substantially higher than the price at which we introduced it to the community. Vertro was introduced in August of 2009 at a reverse split adjusted price of $1.15, giving investors who bought at that time a return at current Vertro’s current price ($5.39 close) of 469%. Atrinsic was introduced this past September at a reverse split adjusted $1.20, giving investors who bought at that time a return at Atrinsic’s current price ($2.55 close) of 112%. We hope to see the gains extended further in 2011 and hope to introduce new investment ideas that have the same kind of upside potential as Vertro and Atrinsic. Of course, we believe that the majority of Atrinsic’s upside is still on the come, as most of the big changes that caused us to buy the stock will just begin to have an impact on operations in Q1 of 2011. We believe that Vertro still has significant upside potential as well and hope to see more investors exposed to the Vertro story in 2011.
All has been relatively quiet through the holiday season as our portfolio companies (like most non retail driven companies) have had little news since mid December. We expect to see that change soon, as Atrinsic starts to ramp up its marketing effort for Kazaa and Vertro management updates investors on its Q4 metrics and updates investors (hopefully) on developments related to their new PC App marketplace.
Vertro’s stock seems to have settled into a fairly broad trading range between $4.70 and $5.60 until we get some catalyst to cause it to do otherwise. Near term potential catalysts include:
1) Apples Release of Mac App Store on January 6 – as one of the first movers to create a PC App store, Vertro should continue to get attention as the bigger tech players start to bring more attention to the PC version of the App stores that have been so popular in the mobile realm.
2) Vertro announces something significant related to its App store – this could be a big App release, deal with a major App developer or some update on how the Appbars are performing vs. the legacy Alot toolbar. We are not aware of any imminent release in that regard, but do generally expect that the company will update its shareholders on their progress with the App store given its importance to the company going forward.
3) Vertro releases Q4 metrics – Vertro management has typically released quarterly metrics soon after the quarter’s end to give shareholders an idea of how the company is doing before the actual earnings are released several weeks later.
4) Initiation of coverage by analysts who are able to bring more retail and/or institutional attention to the Vertro story.
Atrinsic has made a substantial move to the upside since our last report just after the reverse split was implemented, though trading volume has been very low. The significant upwards move in ATRN’s stock price was likely the result of investor’s following the lead of interim CEO Raymond Musci, who reported the purchase of another 15k shares in mid December. We believe this is significant given its timing and particularly so when you consider that he already owned over 100,000 shares. We expect that Atrinsic management will continue to focus its efforts on building out the mobile version of Kazaa and preparing for its Q1 2011 launch. Recent traffic trends suggest that the company has already begun to prime the marketing machine and we expect the company’s release of Kazaa mobile and a menu of new pricing plans to accelerate Kazaa’s growth dramatically in Q1. While we do not have any insight into ATRN’s Q4 performance beyond the third party traffic statistics (which look promising), we do believe that investors will be more focused on management’s execution of the “reintroduction” of the Kazaa brand, rollout of Kazaa mobile and the new pricing / service options and ATRN management’s ability to operate effectively post consolidation of the far flung Kazaa ops.