Iridium Communications Inc. (NASDAQ: IRDM) is far from what most investors would consider a value stock, but like beauty a good deal is in the eye of the beholder.

T2 Partners, a value and sometimes quasi-activist investment firm run by Glenn Tongue and Whitney Tilson,  accumulated a sizable position in Iridium through shares and warrants during May and June.  Frankly, this is almost shocking when you consider what type of companies they have bought into historically.

T2 now owns or controls some 6,529,338 shares of stock in Iridium per a 13D filing from this week.  In reality, it is less than it seems as the purchases include 862,576 shares of common stock as well as 5,666,762 warrants which can be exercised and converted into shares of the common stock.  The purchase cost was more than $20.2 million.  The filing noted that Iridium was undervalued and represented an attractive investment opportunity and that the size of the purchase may grow or contract.

Iridium’s chief satellite rival is Globalstar Inc. (NASDAQ: GSAT), but that company loses money and is likely to for the foreseeable future.  Iridium is profitable and Thomson Reuters estimates are $0.59 EPS for this year and $0.86 EPS for 2012.  If Iridium makes money while its rival loses money, maybe it is a value stock by default.   Globalstar’s revenues in 2010 were about $67.9 million while Iridium had sales of $348.1 million.

What is amazing is that Iridium trades at about 14.5-times 2011 earnings and about 9.9-times expected 2012 earnings.  Before you think of satellite communications just  being needed by mercenaries and supply chain professionals in war zones, consider all the oil platforms and remote areas in the world where mining or other commodity businesses take place.  Satellite telecom (and data) is the only reliable answer and cost doesn’t really matter. Another key issue going for the company is that there are large barriers to entry.  Launching a series of global satellites is no cheap process.

At $8.67, its 52-week trading range is $7.65 to $11.13 and its market cap is $615 million.  Thomson Reuters has a consensus price target of $12.31.

One issue that has always plagued Iridium is that it came public after having been taken private after going bankrupt long ago.  Another issue is that it came public in 2008 and we won’t retell you about something called The Great Recession.

After looking over the data, maybe there is value in Iridium.  If you would have asked us on the fly, the guess would have been beyond ‘No.’

JON C. OGG

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