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  • 2 Deep Value Stocks With Excellent Fundamentals [View article]
    Namtai has publicly stated that they are seeing increased margin pressure, are attempting to sell their Wuxi facility, and have limited visibility on iPhone post December Q. They've explicitly disclosed in press releases that orders may cease and they are actively looking for new customers.

    So, a 20% growth rate is not "modest," it is extremely optimistic and highly improbable. In fact, a decline in growth of 20% is probably optimistic.

    However, we are actually long the stock based on the cash on the balance sheet plus the value of the land in Shenzhen (see the Jones Lang LaSalle valuation report http://bit.ly/1dzcdW6). We believe this report is unduly conservative for several reasons we may discuss in a future article, and see fair value in excess of $15 per share.

    All facts provided above are ascertainable in 5-10 minutes of research, which should be a prerequisite before submitting an article.
    Nov 26 05:03 PM | 4 Likes Like |Link to Comment
  • Cramer Was Right: Why Zeltiq Could Be A Mini-ISRG [View article]
    Douglas (or is it Douglass) - Inflection Point has been right, thus far, for the right reasons on ZLTQ, and all you do is attack him.

    Pretty disgusting of you to suggest "he do more work" when you admit "Personally, I have not researched ZLTQ, but something tells me that ZLTQ "ain't no" ISRG. Just a feelin'." You haven't done the work, but are jumping down his throat?

    Yes, fat removal is not the same as robotic surgery, and maybe AR is up bc sales accelerated at the end of quarter ("you still haven't explained why AR is up") but for a guy who comes across as a serious investor, you sure seem not just cynical (which is fine/good), but nasty.
    Nov 2 08:28 PM | 4 Likes Like |Link to Comment
  • Intel's Dividend Disappointment: Don't Panic - Yet [View article]
    Ashraf, despite your ongoing enthusiasm for Intel's new products, we continue to fail to see what could actually get Intel's top and bottom line to grow like "gangbusters." The secular headwinds that Intel faces in PCs don't appear to be slowing and the risk of future losses in high-margin server surely outweigh gains in tablet, if they even happen.
    We don't foresee a lot of room for future dividend increases. Surely if Intel feels good about its prospects some of its cash flow will be used on additional buybacks. They also continue to spend exorbitantly on cap-ex.
    A basic finance question for you: arent the excess capacity charges non-cash? They negatively impact EPS, but wouldn't the impact of charges be irrelevant on Intel's ability to fund a dividend?
    Aug 4 08:03 AM | 4 Likes Like |Link to Comment
  • Micron: The Prime Beneficiary Of The War Between Apple And Samsung [View article]
    I think you are missing much of the point. Sandisk will also be a beneficiary - our optimism regarding MU is not to the exclusion of Sandisk. The point is NOT that Samsung won't be supplying Apple any more, and therefore MU benefits - although I'd point you to this http://bit.ly/117Q1d5 - Elpida is a MASSIVE MDRAM supplier to Apple. It is that Samsung realizes that competitively it is far more beneficial not to chase memory market share than it was historically. By not chasing market share, competitors see cost components rise, while Samsung's fall. We believe Sandisk is more capacity constrained than MU and is far closer to peak margins. MU has more to gain, and the positive impact of ASPs on Elpida is not sufficiently baked into sellside or (more aggressive) buyside models. Is SNDK also a long - yes. Is MU a bigger long, definitely.
    May 28 09:49 AM | 4 Likes Like |Link to Comment
  • Silicon Motion Could Be The Next Himax [View article]
    My, aren't we just a little bit cynical today.

    Our point is two-fold.

    First, buying a cash-rich, technology company, trading at 3x EPS, with a 5%+ dividend and buyback is usually a good strategy if one is in the business of trying to make money (we are). Prior to the SA article you mention, HIMX had already appreciated over 70% (and despite being "dumped" is 60% higher than when the article was published). Buying a cheap semi stock at a fundamental bottom can lead to significant gains and SIMO offers a compelling risk/reward.

    Second, our point is that the pace of technology change is so rapid that new, incremental markets emerge all the time. So while we may be playing SIMO for a 30-60% gain, unforeseen positive events could occur. We say it is naive and premature to call wearable computing a pump. Is the use of flash memory in cell phones or MP3 players a pump? If you were to look at industry forecasts from Gartner or Forrester in the late 90s (ie 1999), there is no mention of NAND being used in cell phones at ANY TIME in the future, and minimal mention of its application in an MP3 player. These markets opened because of the pace of technology change (die shrinks, mobile broadband, digital encryption, etc.). The history of flash memory entirely supports our view that new applications for flash will continue to emerge, often in heretofore unexpected ways - and we'd suggest that SIMO would likely benefit.

    Finally, we didn't discuss it in the article, but SIMO at these levels is clearly an acquisition target or a target for an activist fund if shares don't move higher. Healthy semiconductor company don't stay at 3x EPS for the long-term.
    Apr 25 12:45 PM | 4 Likes Like |Link to Comment
  • Cramer's Mad Money - The Dollar Store Debacle (1/16/13) [View article]
    Wow, Cramer being Cramer on LF. Regardless of how 4Q turns out, for him to say they've disappointed too many times is absurd.

    Facts are:
    Beaten earnings 7 consecutive quarters
    Stock is significantly higher today than 12 months ago, which is higher than where it was 12 months prior.

    As usual, Mr. C not letting the facts get in the way of a stock pick.
    Jan 17 06:40 AM | 4 Likes Like |Link to Comment
  • Are These 3 Profit Margins Sustainable, Given The Slowdown In The Global PC Market? [View article]
    IBM has virtually no exposure to the PC market. Not sure why you included it in this article other than you failed to do appropriate research - really detracts from the piece.
    PCs will get uglier, and Windows 8 is no panacea.
    Sep 28 08:12 AM | 4 Likes Like |Link to Comment
  • Apple Should Lever Up For A Massive Share Repurchase [View article]
    Hi Ubeenfranked,

    Here’s a brief example that explains what I wrote in my article. Company with 1 million fully diluted shares outstanding, $2.5 million net income, no debt, no cash, trading at $100 per share – 40 P/E, in 8% interest rate environment. The EPS is $2.50 per share ($2.5 million net income and 1 million shares out). Company raises $10 million in debt at 8% (5% after tax) which it uses in entirety to repurchase 10% of shares outstanding. After repurchase, there are 900,000 shares outstanding and $2 million of net income ($2.5 million net income minus $500k of after-tax interest on debt). Now EPS is $2.22, almost 12% less than prior to the buyback.
    Company with 1 million fully diluted shares outstanding, $2.5 million net income, no debt, no cash, trading at $20 per share – 8 P/E, in 5% interest rate environment. The EPS is $2.50 per share ($2.5 million net income and 1 million shares out). Company raises $2 million in debt at 5% (3% after tax) which it uses in entirety to repurchase 10% of shares outstanding. After repurchase, there are 900,000 shares outstanding and $2.44 million of net income ($2.5 million net income minus $60k of after-tax interest on debt). Now EPS is $2.71, almost 10% more than prior to the buyback.
    Let me know if you have questions. Hope you follow me, have several unique, thoughtful and actionable stock picks in the pipeline.
    Feb 21 07:30 PM | 4 Likes Like |Link to Comment
  • ChipMOS Technologies EPS of $0.36 [View news story]
    Revs up 12.9% y/y and 2% vs 4Q13
    2Q rev and GM guidance above consensus.
    May 14 07:19 AM | 3 Likes Like |Link to Comment
  • ChipMOS: Catalysts Plus Excess Capital Should Drive 50% Upside [View article]
    Hayden,

    We went through your numbers. Then we had some very strong coffee and went through your numbers again. We've spent A LOT of time on ChipMOS. We don't follow your approach - maybe more coffee would help :-) We're not saying that your approach is wrong. However, we would suggest that this has been, and remains, a MATERIALLY, miss-priced security.
    As we always suggest, please do your own work. That said, skepticism regarding ChipMOS (a frequent reply from many of our good investor friends) has been a losing bet over the last few years. Despite many earnings/guidance shortfalls over the last few years, the stock is a 4-bagger from 4Q2011. We understand your point regarding concern over a "highly cyclical, capital intensive company" and would point to 1) the capital discipline exhibited by IMOS over the last few years, and 2) the outsized gains that can be achieved when an industry becomes more rational (see MU) - which we believe has become the case with IMOS and its peers.
    May 12 10:03 AM | 3 Likes Like |Link to Comment
  • Pro-Dex: Potential Insider Buys Suggest Dramatic Stock Rise [View article]
    We spend dozens and dozens of hours researching a stock and then writing an article. We think it's fair to hope that people making comments spend a few minutes researching their thoughts before posting. In this case, you could find very quickly in PDEX's 10-K that they have minimal NOLs. Your idea is an interesting one, but is not so in this case.
    Jan 27 11:39 AM | 3 Likes Like |Link to Comment
  • Pro-Dex: Potential Insider Buys Suggest Dramatic Stock Rise [View article]
    Weighing Machine - thanks for your comment. While we acknowledge that problems are possible (we mention the potential failure of new programs to ramp in risk factors), we believe that conclusion is highly improbable.

    First, the company is sitting with ample cash to weather a fairly significant storm (ample cash for an authorized 750,000 share repurchase program). If it is not just "problems," but a significant deterioration in business prospects the Board could be guilty of securities fraud by raising funds without disclosing a material change in the company's outlook. We hardly think this is likely.

    Second, if there were "problems" we'd expect the AO and Farnam to do everything in their power to avoid committing more capital. Perhaps they'd try to execute a PIPE where they put in no more funds. At a minimum, they'd give investors the opportunity to oversubscribe to the offering, and personally buy as little as possible. (Buying all unsubscribed shares, hardly likely). On November 19th Nick Swenson sold his significant holdings in ELSE back to management - he hardly appears reluctant to cut bait. (Notably, Farnam was also involved with ELSE and they too dumped their position).

    We strongly believe the fact pattern supports our view.
    Jan 22 06:13 PM | 3 Likes Like |Link to Comment
  • ExOne issues Q4 warning, peers fall in sympathy [View news story]
    How about PRLB which isn't a 3D printing company, but trades at an absurd multiple, and in-line with the group?
    Jan 14 04:26 PM | 3 Likes Like |Link to Comment
  • Intel: The Inconvenient Truth About Good-Enough Computing [View article]
    As you state, Moore's law in an undeniable reality. However the fact that computing performance continuously improves, doesn't negate the fact that we are, for most, in very much a "good enough" world.

    Incidentally, I am typing this on a more than good enough $249 Samsung Chromebook...couple years ago would have been at least a $999 notebook.

    As an aside, not completely intellectually honest of you to give Intel credit for their $2bn investment in mobile. First, they have been, quite unsuccessfully, investing in mobile for years. Second, since mobile is an ongoing trend, if they don't succeed, they will face quite pressing issues in a few years, so while they could in theory choose not to make the spend, it would cause serious long-term issues. Third, even if they do succeed in mobile, they will have to spend on an ongoing basis (albeit, perhaps somewhat less).

    If you want to really true-up the P&L probably makes sense to also back out from EPS the probable share loss in server and future additional declines in PC.
    Jan 14 07:51 AM | 3 Likes Like |Link to Comment
  • Valuable Insights Positions For 2014: Still An Abundance Of Unique Ideas In Small Caps [View article]
    Hi Hammy,

    Yes, you can go to Sumzero and Vic and the work there is, on average, far superior to SA. However, I'd use the analogy that it's like going to Christie's or Southeby's - of course there will be excellent product, but you'll be bidding against other experts. SA is much more like a flea market, albeit, one where you can find a number of excellent opportunities. But the signal-to-noise problem is exactly why the SA opportunity may persist (and what Pro is trying to address). I'd also suggest that some of the inane pumps on SA create opportunities to short.

    Regarding Chipmos I'd suggest that 1) my understanding is that this is basically on 8" not 12" bumping, so is unlikely to be significant, 2) historical customer market share shifts are minimal. Look at virtually any OSAT company today and their customer list from 5-10 years ago. While price pressure is a concern every so often, there is little historical precedent for customers jumping from vendor-to-vendor, and 3) we're talking about a company trading at 2.5x EV/EBITDA and a ~20% FCF yield. If this Korean news actually impacts IMOS' operations and they trade at 3.5x EV/EBITDA, it's still nonsensical. Despite missing numbers, botched buybacks, reducing guidance, a less than optimal capital allocation policy etc. over the past few years, shares have quadrupled over the last 2 years. Sentiment-wise, this Korean stuff is not a positive, but don't miss the forest for the trees. I rarely say something is too damn cheap, but this is. This stock is going higher in 2014. If they actually deliver on numbers, then there is huge room for multiple expansion, on top of higher numbers.

    Best,
    Val
    Jan 13 08:09 AM | 3 Likes Like |Link to Comment
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