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Voyant's
'Aviation Broadband' On The Runway, Management Eats Own Cooking |
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Voyant
International has made its way back on our radar, not for one reason,
but two. One of the reasons was well publicized, but frankly, the
one that wasn't publicized is the one that's got my motor running
....because it's the one with near-term 'put money in my pocket'
potential.
 First
things first though.
You've
gotta' love a management team willing to eat its own cooking. By that I
just mean it's nice to see a company's top people put their money where
their mouth is and own stock in the ship they're steering ...voluntarily.
You have to really respect it when they're taking stock in lieu
of a cash-able paycheck.
As
of December, Voyant
International's (OTCBB: VOYT) senior officers decided to defer
much of their pay to let the company have all the resources it needed as
Voyant starts to operate revenue-bearing enterprises. Now they've
converted their owed back pay to preferred stock instead. In other words,
they took equity instead of the sure thing. That says a lot about the insiders'
opinion of the company's future.
The
specifics of the deal aren't out yet; I assume they'll show up in an 8-K
soon. The news release did, however, compare this agreement to a
similar one made in December. With the December preferred stock issue,
the owed pay was converted into series B preferred shares....one share
for every $1.00 owed. Those preferred shares are convertible into common
stock at 15 cents or less. (The conversion price formula is pretty complex,
so I'm not even going to bother trying to describe it.)
If
things are drastically different this time around, I'll let you know. I
don't think it'll be much different though.
Hard-hitting
news? Not a game-changer - the decision may have been rooted as much
in necessity as it was confidence. But, it's respectable all the same.
As
we've said repeatedly, the real story and attraction to Voyant is how they
are literally just now starting to drive revenue. On that note...
To
date, the RocketStream deals and the Internet radio agreement have helped
get the revenue machine started. The big fish, however, has been
their Aviation Broadband technology. This service will be the first
to effectively and reliably provide high-speed web access on board passenger
jets. Pretty cool, right?
Though
still in R&D, I have to wonder if Aviation Broadband is on the verge
of becoming a revenue-bearing operation. Why do I think it could be?
The Aviation Broadband site just got a major overhaul. The new site details
exactly
what it is, how it works, and why consumers and airlines would want it.
I don't want to send all of our readers there simultaneously, but if you've
been wondering exactly what the service is, I suggest you take a look at
the site - it explains it all.
 Like
I said, I don't want to get too presumptuous. However, the timing of the
new site says a lot to me.
As
far as the stock goes, 15 cents isn't a bad entry level at all. At that
price, the market cap is right at $20 million. I don't know what kind of
revenue they expect from Aviation Broadband, but the airline industry does
$12.8 billion in revenue per year. A drop in that $12 billion bucket
could be a windfall for Voyant, and you probably don't need any convincing
about the marketability of Internet access on airplanes.
After
peaking at 31 cents in late May (a move that frankly was a little overdone
with what we knew at the time), VOYT shares cooled off appropriately.
The stock found support at the 50 day moving average line a week ago, and
then again just yesterday. We've also seen a support line take shape at
14 cents. It all helps.
The
difference between now and then is that now the company is likely
to be closer to something very big.
Interesting
times for the market, huh? I'm not even going to try and say
all there is to say here in the newsletter. Instead, I'll just refer you
back to the site. It seems I'm blogging a couple of times a day on the
market's next likely direction....and it requires that much attention.
 The
VIX remains the key to it all, though the S&P 500 seems intent on holding
the line at 1260. Also, the NYSE's new lows I discussed on Saturday?
They're still under scrutiny as well.
I get
the feeling things are close to getting even more unpredictable rather
than more stable, so be sure to check in on the homepage often.
By
the way, the market is closed on Friday in observance of Independence Day.
Since this year's 4th of July falls on a Friday, the exchanges are closing
early on Thursday too. (The half day before the holiday is relatively
uncommon.) If you had trading plans to take care of later in the week,
you'll need to get them completed before lunch on Thursday.
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| An
Explanation of the CBOE Volatility Index, or VIX |
| My
apologies to anyone who read this weekend's newsletter and wasn't familiar
with the CBOE Volatility Index, or the VIX. I sometimes forget what's getting
processed in my head isn't necessarily implanted in yours. Since I plan
on keeping close tabs on the VIX in the near future, let's go ahead and
look at what it is exactly.
The
Chicago Board of Options Exchange designed an indicator a couple of decades
ago that was intended to predict near-term volatility. It was called the
VIX, or CBOE Volatility Index. The higher the VIX went, the more volatile
the market was supposed to be over the next one to three months. The volatility
expectation was determined by a change in options prices, which tend to
increase or decrease with volatility .....presumably.
What
the CBOE found was the VIX didn't respond the same way to bullish volatility
that it did to bearish volatility. As bearish periods started, the VIX
moved higher. When bullish periods started, the VIX sank. It was not exactly
a predictor of volatility, but rather became a 'fear gauge'. A Higher VIX
meant investors were fearful, and a lower VIX meant investors were complacent.
As
long as fear and complacency were nominal, no big deal. It was observed,
however, as fear and greed hit extremes - when the VIX hit its extremes
- that the market was likely to be at a point of reversal. That's why we're
not expecting a major upside move just yet...here's not been a good, solid
peak in fear yet.
Is
it a flawless strategy? No, but look at the chart by clicking
here....it works more often than not.
Bottom
line: The VIX is a fear gauge. That wasn't quite what it was designed
to be, but that's how it's been regarded almost since its inception. Moreover,
it's a pretty good contrarian tool to utilize. |
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