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John Rolfe  

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  • TowerJazz: A Towering Double In Share Price [View article]

    I've followed this company for a number of years. I was (unfortunately) a shareholder in Jazz Technologies prior to its purchase by Tower, and subsequently became a Tower shareholder. I ultimately exited my position after being consistently disappointed in the management team's actions.

    Ellwanger is a nice enough guy, but he absolutely does not think like an owner. His focus is virtually always on top line potential, and never on truly building value for equity holders. Part of this may be a function of the company's convoluted capital structure (i.e. capital notes), itself a legacy of Israeli restrictions regarding the ability of creditors to convert their loans into "true" equity. However, the lack of open market purchases by senior management over the years speaks volumes IMO, particularly given the fact that multiple periods of (negative) share price dislocation corresponded with times when management continued to speak publicly about the massive potential of the underlying business.

    When they bought the Micron fab a few years back, it was heralded as a tremendous deal. Now it's being shut down. Between 2010 and 2013, share count (excl dilution from capital notes, etc.) rose by 150%, yet revenue actually declined, and EBITDA declined significantly. That's a brutal track record. Yes, there are some extenuating circumstances, but not enough to explain away that sort of underperformance.

    You may be right, that with the Panasonic JV they have finally captured lightning in a bottle. To the extent that's the case, you will certainly benefit from not having the same sort of management fatigue that I have. However, if I have one piece of advice, it would be to take profits on this one sooner than you otherwise might.

    I really enjoy your posts; you do good work.

    Good luck.
    Aug 27, 2014. 07:31 AM | 16 Likes Like |Link to Comment
  • Micron: Why I Think It's Different This Time [View article]'ve done a great job covering MU (INTC as well). I have one nit to pick with the article. Baupost doesn't have anywhere near 30% of his fund(s) in Micron. Baupost has roughly $30bn under mgmt, only a small fraction of which ($3.5bn) is invested in US equities. Since the 13D filing only requires disclosure of US equities, it might appear that their $1.1bn MU position is 32% of the portfolio, but in fact is 32% of their publicly-listed US equity holdings. It is closer to a 3% position of the overall/broader ($30bn) investment portfolio.
    Dec 3, 2013. 02:44 PM | 3 Likes Like |Link to Comment
  • Meet Your New Monetary Overlord, Janet Yellen [View article]
    To be fair, she may actually have an amazing beard in combination with some extremely effective depilation techniques.
    Oct 9, 2013. 10:57 AM | 1 Like Like |Link to Comment
  • Nam Tai: A Rapidly Growing EMS Provider At 4x EPS [View article]
    Sorry, been absent for a while. The investment premise has obviously completely changed since the original writeup, and has very little margin of safety left. Having a free upside option on a real estate parcel with ongoing operating cash streams providing your downside support is one thing, being (possibly) completely dependent on a real estate development project for your entire value is another thing entirely. Disconcerting, to say the least.
    Aug 6, 2013. 06:36 AM | Likes Like |Link to Comment
  • Nam Tai: A Rapidly Growing EMS Provider At 4x EPS [View article]
    Agree with you. Valuation range is huge. Downside is that you own a bunch of cash plus real estate, but have an operating business with effectively no revenue that is (therefore) losing money. Upside is that they fill in the existing capacity with new customers/products and get back to $1 or $2 per share in EPS. In any case, the uncertainty level is extremely high.
    Apr 29, 2013. 09:34 AM | Likes Like |Link to Comment
  • Nam Tai: A Rapidly Growing EMS Provider At 4x EPS [View article]
    Yes, a big surprise, and not of the positive variety. Obviously a very disappointing quarter. Surprising how quickly the LCM business collapsed. Next few quarters (at a minimum) are obviously going to be very tough. Difficult from here to figure out what the normalized earnings power of the business is. Long-term average has been roughly $0.75/share, so that may be an appropriate number to use for valuation purposes.
    Apr 29, 2013. 09:29 AM | Likes Like |Link to Comment
  • Silicon Motion: Sifting Through The Wreckage [View article]
    I believe that your 2013 estimates are too aggressive. Management called for a 10% increase in the "non-LTE" portion of their business, which they stated was 85% of the total last year. So with roughly $240mm of 2012 non-LTE revenue growing at 0-10%, you get 2013 non-LTE revs of $240-$264mm. Add the $15mm of LTE and you get to $255-$279mm in 2013 revs. GM @ 46-48% yields $117-134mm, back out $72-76mm of OpEx to get $41-62mm of pre-tax, tax @ 15% yields $35-53mm of net income. Even with these (lower) numbers it's still awfully cheap, but figured I'd point out the discrepancy.
    Apr 29, 2013. 07:14 AM | 1 Like Like |Link to Comment
  • Nam Tai: A Rapidly Growing EMS Provider At 4x EPS [View article]
    I echo DTEJ's comments. 1Q is typically quite weak from a seasonal perspective, but should show good progress on a year-over-year basis. From a qualitative perspective, it would be reassuring to hear that mgmt has made progress on diversifying the customer and/or product base. They've made reference in the past to working on a number of material new opportunities.
    Apr 25, 2013. 06:59 AM | Likes Like |Link to Comment
  • Apple: Is It HP All Over Again? [View article]
    If you're going to draw an Apple-HP management comparison, I think it might be more relevant to compare Cook to Hurd. As you stated, the market initially responded positively to both from a share price perspective. Both are/were similar to the extent they're operating guys at heart, i.e. they can take somebody else's vision and do a great job running with it. However, there's a decent argument to be made that both are lacking in their own internal vision. By all accounts, Hurd starved HP of the R&D it needed to ensure (or at least increase the chances of) successfully transitioning to a rapidly changing landscape, focusing instead on aggressive cost management to boost profit margins (and EPS) in the short-term. Cook, too, has yet to prove himself anything close to visionary. He certainly hasn't starved Apple on the R&D front, and he's kept the ball rolling on the existing product line(s), but he's yet to show that he is capable of positioning Apple to exploit the next great wave in consumer computing devices.
    Apr 22, 2013. 07:55 AM | 3 Likes Like |Link to Comment
  • Nam Tai: A Rapidly Growing EMS Provider At 4x EPS [View article]
    I think that a severe downside case would see $1/shr in earnings. At 6x EPS plus cash that gets to you roughly $10/shr. Could it trade lower? Of course, but this management team has proven relatively resilient in finding new sources of revenue and income, so I don't think it would stay there for an extended period.
    Apr 16, 2013. 06:21 AM | Likes Like |Link to Comment
  • Nam Tai: A Rapidly Growing EMS Provider At 4x EPS [View article]
    Yeah, same writeup with a few minor tweaks.
    Apr 15, 2013. 04:58 PM | Likes Like |Link to Comment
  • Nam Tai: A Rapidly Growing EMS Provider At 4x EPS [View article]

    The Company expects to spend $50-70mm on the new Shenzhen facility, with about 75% of that earmarked for facility construction and the balance for equipment. Monetization of the current Shenzhen location should offset anywhere from a material portion of this, to well more than this amount. In any case, even with a big chunk of cash left in the Company to keep customers sleeping well at night, there should be a fair amount of discretionary cash available.
    Apr 15, 2013. 10:55 AM | Likes Like |Link to Comment
  • Edgewater Technology: The Board Has Been Sleeping For Longer Than I Thought [View article]
    We must be speaking about different companies, because it looks to me like EDGW was up 38% in 2012, which clearly isn't anywhere close to "almost doubling". This 38% gain, moreover, had the benefit of strong tailwinds from a rising market; hardly something to write home about after a full decade of brutally dismal performance. I have no doubt that it is possible to find brief periods where EDGW outperformed relevant indices, but from my perspective a "good reporter" looks at the totality of the CEO's tenure. From that perspective, Ms. Singleton has been a disaster.
    Feb 12, 2013. 08:09 AM | Likes Like |Link to Comment
  • PNI Digital's Rapid Growth Potential [View article]
    No, sorry. Punched out of this one long ago.
    Feb 12, 2013. 08:02 AM | Likes Like |Link to Comment
  • Xerium Technologies: A Recurring Revenue Business at 4x Cash EPS [View article]

    I've been out of the name for quite some time. Between the leverage and the deterioration in the fundamentals, I don't see much margin of safety. If they get this boat turned in time to benefit from a turn in the global economy, there's enormous upside. However, they'll need that economic wind at their back in order for this to work, and that's obviously a variable that's out of management's hands. Given the potential upside, I'd rather buy this 20% higher with things going in the right direction than take a marker on on the global macroeconomy.

    Nov 15, 2012. 07:17 AM | Likes Like |Link to Comment