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Value Bulldog
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I am a research analyst for a long/short value-oriented hedge fund. Most of my attention is focused on the tech, telecom and media sectors although I occasionally look for value (or its opposite) in other areas. Note that I take long and short positions in the stocks I discuss on Seeking Alpha.... More
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  • AOSL's products in critically short supply 2 comments
    Jul 2, 2010 1:42 PM | about stocks: AOSL, FCS, VSH, IRF
    According to iSuppli (via Barron's TechTrader blog), several key PC semiconductor products are in critically short supply, including the low voltage MOSFET's that are AOSL's specialty. Lead times are extremely long with suppliers gaining greater pricing power. While the market seems to be pricing in significant estimate cuts, the reality on the ground seems to be that they may even have room to come up.

    It's a bit hard to square these kind of industry dynamics with AOSL's rock-bottom 3.5x EV/FY 2011E EBITDA valuation. Or the valuation of FCS, VSH and IRF for that matter.


    Disclosure: Long AOSL
    Themes: Semiconductors Stocks: AOSL, FCS, VSH, IRF
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  • ragingbullish
    , contributor
    Comments (11) | Send Message
     
    Why is AOSL getting hit so hard? Is it because they have lower margins compared to peers? It has no debt and is trading at less than book value- the market action doesn't make sense. It made a new low today and it is my worst performing holding.

     

    Disclosure: Broker duped me into buying the IPO
    8 Jul 2010, 02:34 PM Reply Like
  • Value Bulldog
    , contributor
    Comments (105) | Send Message
     
    Author’s reply » I have no idea why AOSL is trading the way it is. All the market intelligence I can gather says (1) the PC cycle is intact; (2) discrete components such as the MOSFETs AOSL specializes in continue to have long lead times, indicating demand exceeds supply and (3) AOSL is taking share from competitors.

     

    I didn't buy until it had traded down after the IPO and I had a chance to do some more work, but my guess is that IPOs are largely sold to uninformed buyers who are selling because it isn't going up. That and generalized concerns over macro affecting the PC cycle.
    8 Jul 2010, 02:58 PM Reply Like
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