In the last quarter, the Contra Guys averaged down on Cygnal Technologies, Analysts International, Abitibi Consolidated, and Kelman Technologies. They took new positions in ATS Automation, Zarlink Semiconductors, and Solectron.
Zarlink renews an old love affair: previous incarnation, Mitel Networks, was a big trade that goosed the performance numbers in the early years of the newsletter. The advisory courageously averaged down over a lengthy stretch to $1 a share, then took it to the bank averaging out over the upswing.
Currently, Zarlink is in a highly competitive industry but has a clean balance sheet with lots of cash and no debt. It’s trading at about a 60% discount to book value and has experienced management. What’s perhaps most interesting is a significant amount of buying by insiders.
ATS Automation is also a pick of the astute folks at Goodwood Funds. As the latter nicely explain in one of their monthly reports, the company’s Photowatt division (a manufacturer of solar energy cells and modules) has an estimated value as a public entity greater than the current price of ATS shares. Thus, investors can get the company’s two other divisions of automated manufacturing and precision components for free.
Zarlink 1-yr. chart: