Nassarius Capital
Long/short equity

Emcore: Activism, Sum-Of-Parts Analysis Suggest Significant Upside

Executive summary:

  • Investors extrapolating past issues into the future are failing to realize both EMCORE's turnaround potential and EMCORE's strong positioning in Solar PV and mirco-ITLA markets.
  • Activist firm Becker Drapkin Management, with an impressive turnaround track record, has gained three Board seats.
  • SOTP analysis produces FY15 PT near $11, upside potential greater than 120%.

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COMPANY OVERVIEW

EMCORE Corporation (NASDAQ:EMKR) offers a vast portfolio of compound semiconductor-based products for the broadband, fiber optics, satellite, and solar power markets. Operations are split into two reporting segments: Fiber Optics (~60% of revenue) and Solar Photovoltaics (~40% of revenue). The Fiber Optics segment is further divided into Digital (telecom) and Broadband (majority cable TV), thus experiencing high competition, high volatility,...

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