Barron's declares Kulicke & Soffe (KLIC +9.5%) "a company that looks ripe for an activist investor." given its giant cash balance (accounts for $508.5M of a $997M market cap), lack of a dividend or buyback plan, and a dominant position in the wire bonding segment of the chip equipment industry.
K&S says it needs to keep the cash in case an M&A opportunity arises. However, the company has spent little on acquisitions as of late, and its past deals haven't fared particularly well.
Two risks: K&S is vulnerable to cyclical swings - revenue is expected to be down 31.3% Y/Y in FY13 (ended Sep. '13) before rising 22.7% in FY14 - and there are concerns wire bonding (though still used to make 85% of chips) will be gradually displaced by newer technologies.