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  • Harvard Bioscience Spin-Off Likely To Drive 50% Near-Term And 100%+ Long-Term Upside [View article]
    Todd, it's hard to understand your view. With Interim CEO/President David Green and CFO Tom McNaughton departing for HART, we're not sure which management remains to "milk the company's profits." Green and McNaughton remain sizable HBIO shareholders, and while we're not fans of them as managers, we certainly like being aligned with them (they are HBIO shareholders as are we) given their history of acting in their self-interest. If you have information that we're not aware of, we'd be interested to know. We think we were extremely clear that management has not been shareholder friendly - but since they are now (or soon will be) shareholders aligned with us, and not management, we feel very comfortable.
    Jul 19 10:28 AM | 1 Like Like |Link to Comment
  • Harvard Bioscience Spin-Off Likely To Drive 50% Near-Term And 100%+ Long-Term Upside [View article]
    Colin - wow! Thank you for sharing.

    After reading the excellent link it is ASTONISHING how many near-identical conclusions we draw. We had never heard of Tappan Street Partners (obviously brilliant guys ;-) ) nor read their interview and HBIO commentary. Clearly, when thoughtful, like-minded value investors use a common prism in their analysis, similar conclusions are possible (but wow!).

    Anyhow, they make an excellent point that we neglected to mention, that shares of HBIO had traded to about $6 earlier this year in anticipation of the HART IPO, and pulled back almost 20% following its withdrawal and the ensuing confusion. At $5, with multiple ways to get paid, we think the current entry point is exceptionally attractive. We also highly recommend that interested readers check out the link that Colin provided.
    Jul 18 09:20 AM | Likes Like |Link to Comment
  • AVG: Stale Short Thesis = Great Opportunity! [View article]
    Thanks for the quick reply. Not a sign we like to see, but we are long given risk/reward, strong product reception, FCF (basically most of the reasons you identify in your excellent write-up).
    Jul 17 05:32 PM | Likes Like |Link to Comment
  • AVG: Stale Short Thesis = Great Opportunity! [View article]
    Ravee - really excellent article, nice work. Am curious your thoughts regarding the very sizable recent insider sales. Obviously it's nice to take some money off the table, but timing is a little odd ahead of what should be solid earnings and an opportunity to blow up shorts. Thoughts?
    Jul 17 12:09 PM | Likes Like |Link to Comment
  • ChipMOS: Stock Remains Dirt Cheap, 50%+ Upside By Year End [View article]
    Without question we agree that on its surface it might appear borderline insane that we are suggesting that shares of IMOS could jump 30% overnight. That said, we believe that is actually a very likely case.
    The thing is: 1) we believe most investors are not paying close attention to this opportunity, 2) there is the cross-border element, which adds complexity and 3) one just doesn't know until they know.
    The best analogy we have is in looking at an IPO. How many times have we looked at an IPO (where hundreds and hundreds of other funds are also looking) where we participated because we thought it would be strong. There have been times where the stock didn't move, and there have been ones where it doubled (and we missed out, or didn't ask for a big enough allocation). One can think they have a feel for a stock in a very well researched situation and be off by a magnitude (as can the bankers, who are paid handsomely NOT to be off). So in a poorly understood situation with multiple moving parts is it in fact crazy to think we could see a 30%+ pop? We have a significant long position, and assuming the market is flattish and demand trends are stable, give or take, between now and the time of the stock sale, we expect to be paid handsomely.
    Jul 15 01:22 PM | Likes Like |Link to Comment
  • ChipMOS: Stock Remains Dirt Cheap, 50%+ Upside By Year End [View article]
    If you are a legitimate institutional investor (and possibly if you are not) you could check in with the lead underwriter in Taiwan, Yuanta Securities. Our sense is that management has already met with numerous institutions throughout Asia, that in aggregate, could take down the entire deal ~$110 million many times over. At 3x EV/EBITDA these institutions understand that they essentially being offered the opportunity at free money. The opportunity to build $10 or $20 million (or more) positions, without driving shares higher, but actually at a discount, is incredibly compelling. It is our expectation that shares will immediately trade dramatically higher - we would expect pricing (assuming macro does not change significantly) at ~ NT$28 and shares to trade at NT$38-NT$45 within 48 hours (possibly much sooner - this will, in our view, essentially be like a hot IPO). The US equivalent is 70% of the NT$ value plus about $4 of cash per share. The stock could spike 40%-50%+ in the US, basically overnight, when the deal is placed.
    We are long the stock, and also have meaningful positions in Sep 20 and 22.5 calls.
    Jul 12 06:08 PM | Likes Like |Link to Comment
  • Buy Rubicon Ahead Of Cyclical And Secular Upturn [View article]
    Digitimes continues to publish positive news flow on LEDs -

    and the article that you cite - Prices for sapphire ingots in 3Q13 to rise 15-20%

    Admittedly, this is a call where we were flying a little blind. However, once it's obvious that things are getting better, the stock is already 50% higher. This, like MU last November (which we recommended at $5.71), is one that you have to buy when things look ugly.

    We think it's extremely telling that 2 major banks downgraded in recent weeks, and shares continue to hang in. A decent 3Q outlook when RBCN reports, and shares could quickly return to double digits.
    Jul 11 07:28 PM | Likes Like |Link to Comment
  • Xinyuan Real Estate: Trading At 36% Of Book Value [View article]
    Good comments by Jake. Agree with the thoughts. It is intriguing.

    One area in which we STRONGLY disagree with the article is the assertion that a buyback is an expensive way to tell shareholders that they care. At 1.9x EPS (if EPS is real), a buyback is the ABSOLUTE CHEAPEST, highest IRR investment, that the company could possibly make. A buyback would yield far higher returns at the current multiple than 30-50% levered returns in potentially risky assets/projects. A management that is not buying back stock hand over fist at these levels either doesn't get it (a major concern) or isn't playing on the up-and-up (an even greater concern).
    Incidentally, as far as we know, Sam Zell and John Griffin are still extremely astute investors - where are they now?
    Jul 11 06:28 PM | 3 Likes Like |Link to Comment
  • ChipMOS: Stock Remains Dirt Cheap, 50%+ Upside By Year End [View article]
    Most of IMOS' customers and comps had an ok/mediocre June, and thus IMOS sold off. Amazingly, IMOS' June numbers were fine (likely MU and CODE were strong). GM for 2Q a bit below expectations, but the real catalyst to take shares 50%+ higher is in the next 4-6 weeks with earnings and the sale of 8150 (Chipmos Taiwan) shares. This stock IS going much higher.
    Jul 11 04:12 PM | Likes Like |Link to Comment
  • Micron: The Old DRAM-NAND Switcheroo [View article]
    Russ, continued exceptional work. Our only disagreement (and this is more with your previous article) is that your assumptions regarding Elpida accretion will prove too conservative. If you look at last public data on Elpida, and make modest assumptions on MB growth, manufacturing cost declines, ASP increases, incremental gross margins, and fixed-assets/depreciat... the most bullish assumptions from the sell-side might be in the ballpark. Conceivably, Elpida contributes $2.00 annually...we'll see. We're long.
    Jul 11 11:48 AM | 2 Likes Like |Link to Comment
  • QLogic: Significant Opportunity In Light Of Management Shake-Up And Emulex M&A Chatter [View article]
    Ashraf - solid argument, nice job here.
    Jul 8 03:19 PM | 2 Likes Like |Link to Comment
  • ChipMOS: Stock Remains Dirt Cheap, 50%+ Upside By Year End [View article]
    Our understanding is that the interest level in Taiwan in the stock sale is very high (EXTREMELY high). Assuming the stock prices at NT$25-NT$27, shares would likely trade up immediately into the mid NT$30s (ie - NT$32-$38) - shares in the US could/would then likely have a 20-30% one or two day move. Of course, we also expect a new major outsourcing deal to come from $MU/Elpida which would be extremely positive and additive to EPS - which could come before or after the Taiwan placement. So basically right now, we see close to nil downside and major upside. Waiting, we believe, might be penny wise, but very pound foolish.
    Jun 28 07:24 AM | 1 Like Like |Link to Comment
  • ChipMOS: Stock Remains Dirt Cheap, 50%+ Upside By Year End [View article]
    This year will be about $120 million vs. cap-ex of approx $100 mil.

    Last year D&A was $158 mil. Year before that was $195 mil. Next year around $105 mil.

    A major part of our thesis has been that as D&A rolls off, EPS will look better and better. While that is of little concern to us, we know that most tech investors are tunnel-vision focused on EPS (as opposed to EV/EBITDA, FCF yield, etc.). So in a flat year, EPS grows nicely.

    You can go back to some of our older articles for more history on this, but essentially, the company overspent on cap-ex in '06-'07, in large part for a huge multi-year program for Spansion (who then went bankrupt). The company will never spend like that again. About 15% of revs on cap-ex has been the plan for the last few years, and will be for the next few - in fact, here's an article from yesterday which says as much

    The company might spend a bit more later this year or next year if they get STRATEGIC Micron/Elpida business, but the returns would be excellent. In fact, Cowen raised its price target on IMOS yesterday on the potential for an attractive new piece of business from Micron/Elpida (amongst other reasons).

    Personally, we're very happy to have IMOS grow 5-10%+ a year and throw off in excess of $100 million per year in FCF. Let's see, 29 million shares outstanding...they could pursue a massive accretive buyback, get taken out, or initiate a huge dividend. $19 seems cheap, no?
    Jun 25 08:41 PM | Likes Like |Link to Comment
  • ChipMOS: Stock Remains Dirt Cheap, 50%+ Upside By Year End [View article]
    Sure it could get cheaper, but we laid out multiple catalysts that will drive shares to fair value which is SIGNIFICANTLY higher than the current price. Markets may correct, but we view a well-positioned company, with no net debt, trading at under 3x EV/EBITDA as a pretty safe place to hide. Find us a poorly positioned company trading at 3x EV/EBITDA. IMOS remains so cheap it's ridiculous.
    Jun 25 07:26 PM | Likes Like |Link to Comment
  • Strong Chinese smartphone demand (IDC estimates Q1 shipments rose 117% Y/Y) will lead second-tier LCD driver IC vendors to see Q3 shortages, and bigger suppliers such as Himax (HIMX) stand to benefit, says Digitimes. The site also reports driver IC packaging firms such as ChipMOS (IMOS) are seeing higher capacity utilization rates. Himax shares are down 41% from their May 16 high of $8.19, thanks in part to its stock offering (and the potential for another). [View news story]
    The article also notes that Novatek Microelectronics is seeing huge demand - Novatek is a 20%+ customer for $IMOS, and $HIMX is a top-8 customer.
    Jun 24 05:19 PM | Likes Like |Link to Comment