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  • Veeva Systems: Digging Deeper Into The Madness [View article]
    Ashraf, great work here. I hope in 2014 you do more of this, and perhaps slightly less on Intel (despite your expertise). Investigative analysis like this will make both you and your readers money, and further enhance your reputation. Well done.
    Jan 3 08:09 AM | 7 Likes Like |Link to Comment
  • Micron Is Still Shareholder Unfriendly [View article]
    Judy Bruner is terrific. Kipp's been team Micron for 20+ years, so he ain't going anywhere. Trust me, massively long and frustrated - just not equally a conspiracy theorist. They can do a better job (and should), but am not overly concerned as fundamentals will ultimately win the day and we will also make serious buck on this trade.

    As an aside, can't even begin to fathom how Wong came up with his F1Q eps estimate. If he was a doctor he'd get sued for malpractice.
    Oct 13 11:13 PM | 7 Likes Like |Link to Comment
  • Elpida Is Now Micron - Or Back To (From) The Future - Part 2 [View article]
    Barribas, we're sure Russ will weigh in, but we have written multiple articles on IMOS and have followed them closely for several years. We'd suggest that the Elpida acquisition represents a significant incremental growth opportunity for IMOS. If you review IMOS' most recent 20-F you would see that their MU related revenue has increased as a percent of sales and in absolute dollars each of the last 3 years - even years where Micron's own revenue was declining. Clearly MU is outsourcing more and more to IMOS.
    The thing is, when MU began outsourcing to IMOS several years back, they chose IMOS over Taiwan competitors PTI and Walton (Elpida's partners). With IMOS sitting on a large empty manufacturing facility that they acquired in early 2012, lower pricing compared to peers, and a long-standing excellent relationship with Micron, there is every reason to believe that IMOS will get significant additional business from Elpida over time.
    Of course, that IMOS offers a near 20% free cash flow yield and trades under 3x EV/EBITDA is also a great reason to be long the stock. And to be clear, that is not a function of this year being a "peak" year - if you check out 2011 or '12, not great years for DRAM, you'd see similar levels of free cash flow and EBITDA.
    Aug 4 07:37 AM | 7 Likes Like |Link to Comment
  • Crossroads Systems: Valuable IP And Niche Product Could Lead To Significant Upside [View article]
    Ruerd - given we are frequently thinking about the questions you pose, we'll offer some thoughts (apologies for hijacking the comments section). Of course any/all opinions are welcome.

    >>> I find this stock fascinating but difficult to value. So based on VI's responses I have a few more questions to anyone here.

    We also find it difficult to value given the potential wide dispersion of outcomes. Our approach has been to probability weight outcomes to arrive at an expected value (E). In our view CRDS trades at a steep discount to E, although our confidence that E is the right number is far less than if we were modeling P&G (in our analysis, the probability of the actual number being above/below E is equal). Of course, an uncorrelated portfolio of stocks trading at a huge discount to their respective Es should massively outperform over time.

    >> VI's minimum revenue estimate of 20 million is very helpful. What I understand is that StrongBox is worth at least $3.3 (conservative 5 multiple). Do you agree with the author on the steep adoption curve? In how many years will StrongBox achieve 20 million of revenue?

    We're not going to argue on multiple although 5x seems extremely conservative. We agree regarding the adoption curve. Strongbox revs could be flat to slightly up for 2 or 3 more quarters. $20M could be a '16 number, or possibly slightly later. Kind of begs the question why own the stock today. 1) If there is evidence of traction with Strongbox sooner, the stock likely will move well ahead of revenue. 2) We could wake up to news of a meaningful settlement for any of the 972 patent cases (CSCO, DELL, HILL, Huawei, NTAP, ORCL) any day. It could be a lump sum or an ongoing royalty. The Markman hearing is the first week of October. We believe a positive outcome for 972 is very likely, and an extremely positive outcome is conceivable - and some of the parties may decide to settle ahead of the Markman.

    >> And if it turns out CrossRoads patents are valid why should CrossRoads only collect 2.5 to 5% of the royalties they will be entitled too? If they win these cases, is there still any way to escape from paying royalties?

    There is no reason they couldn't collect 3-5% on $82bn if they won all the non-'972 cases on which there is relevant infringing revenue. Of course, it would likely be decades before we saw all of that money. Given our view that this is a pragmatic management that would be willing to settle for a reasonable amount, factoring in time, potential for winning/losing, etc. we are steeply discounting the low end. That said, we have no idea the dollars for which the company would settle, sell the patents, etc.

    >> Without any additional information the chances someone wins in court are 50%, since only one of the 2 opponents can win. But in this case, does anyone have an idea what the chances are that Crossroads wins all cases and can collect $5 per share or, more importantly, what are the chances they loose all cases? How much dependent is the outcome of one case from the other? How many cases are there at the moment? And in these court cases, what is the total revenue these companies should pay royalties over?

    Are you referring to '972 or non '972? The '972 is likely several billion in annual revenue. A 3% royalty on that would be very big. To be conservative, assuming they got only $500k per Q from the 6 litigants, that would be $12mn or $0.50 EPS per year. Of course, it could be many multiples of that or a significant lump sum with no future royalties. Based on the work we've done, we have a strong view that there will be a favorable outcome - we don't think it's 50:50.
    Jun 29 07:30 AM | 6 Likes Like |Link to Comment
  • Intel's Time Is Running Out [View article]
    Ashraf, nice work. Only issue is that if Intel fails, very good chance that you will be selling a stock that has fallen dramatically from current levels - it may prove to be a sell call that's too late.
    Getting an early read on Broxon is going to be key. If mobile doesn't happen, and server feels pressure (I know you're skeptical of this), very cheap looking Intel shares will have proven a massive value trap. Disclosure: no current position.
    Jan 17 01:43 PM | 6 Likes Like |Link to Comment
  • Valuable Insights Positions For 2014: Still An Abundance Of Unique Ideas In Small Caps [View article]
    I am 100% telling you that SA is an underutilized resource.

    Many/most buysiders are ridiculously busy chasing datapoints, speaking to analysts and managements, attending investor conferences, building/reviewing models, etc. It is somewhat time consuming (but well worth it) to go on SA and figure out who the good authors are and what's junk (I suppose they could all buy Pro subscriptions - 1 good idea pays for it).

    Think how many stocks on SA have little to no research coverage. Most buysiders are looking for stocks with decent market cap and trading volume and analysts that they can call so that they can get information/models, etc. Or they are introduced to companies that they meet at conferences. Many of the companies I've written on recently have limited coverage and attend few, if any conferences.

    Lastly, I would compare SA to online dating circa 1997. Back then there was a stigma - it was new, only losers do it, how do you know the person you're meeting isn't a psychopath. Now everyone is doing it, and then some. The people I've spoken to regarding SA have said, "V.I. are you serious? From the few times I've looked, pumpers and idiots frequent SA" Well, they haven't spent enough time and aren't reading the right articles.

    In terms of writing, it can be time consuming, and there may be compliance issues at many institutions.

    As I wrote previously, I believe it's an inefficiency that won't last (I hope I'm wrong), but it presents a great opportunity for us today.
    Jan 9 09:26 AM | 6 Likes Like |Link to Comment
  • Trouble Is Brewing At Farmer Brothers Coffee [View article]
    Richard - again showing why you're one of the best writers and researchers on Seeking Alpha. Well done.
    Jan 7 10:34 AM | 6 Likes Like |Link to Comment
  • On Track Innovations: Improving Ops And Valuable IP Is Formula For Multi-Bagger [View article]
    Yes, please do your own homework.

    Re: our picks - our record on SA is available for all, and you can choose to view us positively or not.

    Re: "huge busts" - LOJN is essentially flat from the time of our recommendation - please give it 6 months. DRAD hit a multi-year high today and is up almost 30%. RDCM is modestly higher. HBIO, if you add HBIO and HART is modestly higher. IMOS was first recommended in March 2012 at $11, although in an article in February 2012 on Micron we noted that we were long (around $7 or $8 we recall). Anyhow, from $11 to $18+ over 18 months is a sound return. NTE was first recommended at $7 and we round-tripped it. We got the business wrong, but our conviction in the value of the land has not changed. This will be a $20 stock one day. You neglected to mention MOVE and RBCN which are both solid performers. And most notably, you neglected to mention MU which we recommended last November at $5.71 - almost a 4-bagger. You literally could have bought as much as you wanted of this under $6.
    We also correctly recommended MM and GRPN as shorts and MDCA as a long. Our only true blunder was a long call on NLST.

    So judge us as you see fit. We're very comfortable with our work and our results.
    Nov 18 06:15 PM | 6 Likes Like |Link to Comment
  • On Track Innovations: Improving Ops And Valuable IP Is Formula For Multi-Bagger [View article]
    JayKidd,

    Thanks very much for the detailed write-up. We agree that there is something potentially enormous here with OTI. We felt that if we were excessively bullish we would be perceived as overly hyping or, shame, shame, pumping. When we write that this can be realistically be a 5-bagger, we don't write that with hyperbole, we believe it.
    Both the IP/patent opportunity and NFC/e-wallet opportunity are enormous, to say nothing of parking. The beauty of the investment is if they both fall far short of our hopes, the stock probably still goes materially higher given the size of the opportunity.
    This could be huge, and while it's off the lows, this is really ground-floor.
    One other point, we hope all understood we were being tongue-in-cheek writing that we're on a first name basis with Jeff. We've never met him. However we do know people that know people that know him. We simply can't imagine he would have a Rule 10b5-1 BUY program in place unless he was extremely confident that OTIV was worth a magnitude more than its current price.

    As we write in every article, do your own due diligence. As JayKidd suggests, the more work you do on OTI the more we believe you will feel comfortable with this as an investment (not a trade) and as an enormous opportunity.
    Nov 17 04:17 PM | 6 Likes Like |Link to Comment
  • Intel's Dividend Disappointment: Don't Panic - Yet [View article]
    Actually, the thing to do if you're at a bottom (which may or may not be the case with Intel) would be to buy back as much stock as possible. That maximizes the future EPS that accretes to shareholders.

    Keep up the great work!
    Aug 4 08:32 AM | 6 Likes Like |Link to Comment
  • Apple (AAPL +2.4%) responds to David Einhorn's letter opposing Proposal 2 within its shareholder meeting proxy by insisting the proposal won't prevent the issuing of preferred stock, but simply requires that such a move receive shareholder approval. The company adds it will "thoroughly evaluate Greenlight Capital's current proposal to issue some form of preferred stock," and has been "in active discussions about returning additional cash to shareholders." Shares spiked higher into the close. (Einhorn's letter[View news story]
    No reason they can't up the dividend/use Einhorn's Preferred, and also increase the buyback so that it's more than a nominal amount. Management should show confidence that there's no better investment for Apple than Apple.
    Feb 7 04:51 PM | 6 Likes Like |Link to Comment
  • Why Is Uni-Pixel Falling? [View article]
    In our 20+ years in investments, we spend a decade at 3 investment banks ranging from several hundred to tens of thousands of employees.

    We find it shocking that any employees MDB would choose to post in this venue. In our experience, we would be sanctioned by management, if not fired for doing so. The comments from MDB are critical of this post, but MDB neglects to disclose information such as fees received for investment banking or ownership positions (ie information customarily provided by guests on CNBC).

    This speaks very poorly for MDB, as if Mr. Pearson's well researched background on MDB wasn't damning enough.

    Full disclosure: we have no position in Unipixel.

    For any Unipixel longs, we'd be curious to know of any examples of merged Nevada shells that have spent as little as UNXL (under $10 million combined for 2009-2011. It would be easier to believe this is a Cinderella story if there were examples of some from the past. Unfortunately this appears to walk and quack like a duck.
    Jan 27 08:54 AM | 6 Likes Like |Link to Comment
  • Microsoft: Surface Sales Don't Matter [View article]
    Ashraf, do you expect MSFT to gain or lose share with Office? I'd expect lose. Pricing power getting better or worse?
    Is MSFT gaining share with it's browser?
    How about in search?
    X-box gaining share - perhaps, but traditional gaming platforms rapidly losing share vs mobile gaming.
    How about in Mobile? Ashraf, you love your Android phone, right? Where's MSFT fit in?
    And how does the move from PCs toward tablet benefit MSFT/windows?
    So, Surface might not matter, but in the many segments that do matter, I'm curious where Microsoft is gaining share or secular trends are moving in their favor.
    Yes, they have a cash hoard and look cheap, but what exactly is getting better for them?
    Dec 27 09:22 PM | 6 Likes Like |Link to Comment
  • NQ Mobile: Don't Be Fooled [View article]
    Had NQ wished to provide a more substantive press release they could/would have addressed 1) materials that Sherman and Sterling noted were missing/compromised in their investigation (sure, nothing was FOUND improper, but S&S noted that materials appeared to be missing), and 2) that they were moving ahead with PwC by providing them the materials they deemed necessary for the expanded scope of their audit. Significant unanswered questions remain.
    Jul 9 09:09 AM | 5 Likes Like |Link to Comment
  • Crossroads Systems: Valuable IP And Niche Product Could Lead To Significant Upside [View article]
    Ruerd,

    On the 972 patents there is a very high probability they are worth something. They have had litigation or threatened litigation with more than 40 parties and never lost. Their Markman hearing will be in front of the same judge who heard their previous cases. If you're Cisco is it worth perhaps a huge loss in court versus a reasonably smaller lump sum or modest royalty (several million a year is a rounding error to Cisco but hugely impactful to CRDS). It could be a zero, but we believe there is a high probability of a positive outcome, potentially a big one.

    For the non-972, it is a family of 117 patents. Management has not detailed if there are certain ones that are more or less material or who the litigants would be. In all likelihood there would be numerous cases (some likely settled right away). There could be patent sales or JVs with IP litigation firms. We think it is probable the company is relatively quiet about details until they prepay their Fortress debt. Doing so would shift ownership of the patents from what we believe is an 80:20 JV to 100% ownership by CRDS. That they prepaid $2mn of the debt in early May (see most recent call transcript) suggests to us that they understand the value of the IP (as does Eberwein's new 10b5).

    Given the scope/breadth of non-972 patents it seems unlikely they are worth zero, and could be worth a lot more, just hard to size, so we are trying to frame our analysis with conservative assumptions. For now, we are assuming they will receive a PV of less than $200mn, although this is the segment about which we have the least knowledge, and we could be positively surprised by a magnitude.

    Absolutely agree with you that initial disappointments often yield exceptional opportunities. Given the historic failures of the company we think relatively little is baked in - based on our work we believe this time is very different.
    Jun 29 10:06 AM | 5 Likes Like |Link to Comment
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