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SIMO

Remi
Thu, 13 Aug 2015 06:31:19 GMT

I'm going to throw another name out there that I haven't mentioned here previously - Silicon Motion (SIMO). They have had had a fast growing business for mobile phone storage (eMMc controllers for Flash storage - they are number one there with a monopoly pretty much in Android phones) and have been rapidly taking market share for SSD drive controllers. Not sure how much of you know about SSD but it will replace traditional hard drives in the next few years (already represents 30% of laptops). This company has been growing at a torrid pace - I estimate this year they will grow 30% and with margins also expanding, earnings will grow even faster. They already said they will be number one for SSD controllers by end of this year, displacing Marvell and LSI. Last quarter they announced 8% sequential growth in sales, guided another 5-10% sequential growth in sales for Q3 (I think it could go above the 10), and said due to all the design wins including both eMMC and SSD they will grow again in Q4 even though seasonally it's usually not the case. They also mentioned they a re looking at 50% growth for the SSD controller part of their business next year due to the growth in that market and the fact they are taking market share. They recently acquired a Chinese company that supplies entire enterprise SSDs (not just controller) to Chinese cloud companies. The market in China for enterprise SSD is estimated to grow at 30% for several years and they think they can grow faster than the market. All this growth while all other semiconductors report softness. To top it off they have 100s of millions in cash with no debt and pay a dividend. How does the market respond? they sell this one off along with the rest. Now where we sit it is an unbelievable value at around 25 a share (was trading around 37 at its peak not very long ago) And then just to add even more potential, a recent article in Digitimes says they are the controller for Intel and Micron and their breakthrough X-Point technology: http://www.digitimes.com/news/a20150731PD215.html They are already the secret sauce that will allow Micron/Intel as well as Toshiba/Sandisk and Hynix to compete with Samsung with 3D NAND. They have engineers that constantly excel at making cheap, power efficient, resilient and high performing controllers - just what the market needs, especially smartphones. Those in the tech space know that once X-Point comes to fruition it will may destroy all other alternatives, fast non-volatile memory has been a dream for decades. They are the perfect acquisition candidate for Intel. I could go on and on but don't have the time right now - just check it out since its a smoking deal currently, it will be above 40 within a year. I have just as much of this one as I do of GLUU, some shares I have held since I initially bought at 10 dollars a share a few years ago. If you want a pair trade to protect against market declines you can short Western Digital since it will get destroyed with the proliferation of SSD.

Kyle
Thu, 13 Aug 2015 17:27:02 GMT

Be careful, this was a Matt MARGOLIS pick back on July 20 on SA. http://seekingalpha.com/article/3339225-silicon-motion-technology-worth-considering-for-the-long-haul

Samuel
Thu, 13 Aug 2015 18:03:49 GMT

^Lol anything associated with Matt will never get a chance on this forum... how sad. Although the stock has dropped ~20% since he wrote that article. Lol.

wayne
Thu, 13 Aug 2015 23:38:36 GMT

Remi; Thanks for the SIMO idea. Looks interesting and I'll do some more DD. Appreciate your contributions to this message board.

Kyle
Fri, 14 Aug 2015 01:34:07 GMT

Although I made a quick comment, Remi, I appreciate your contributions here greatly and I will also look into this idea as well. Maybe take some info from Matt M.

Samuel
Fri, 14 Aug 2015 02:13:26 GMT

Remi is definitely one of the best contributors left on this forum. I miss the day when Michael would chime in here...

Remi
Fri, 14 Aug 2015 06:32:03 GMT

I've been following SIMO for years, presumedly long before Matt (who probably only took notice when he saw their partnership with Micron). Looking at Matt's articles, he has picked alot of names which have been big losers that I would not have considered at the price point he picked them: GTAT/INVN/PLUG/MU. If anyone has any questions regarding Silicon Motion, let me know. The biggest risk in case you're wondering is some customer concentration with Hynix but I am monitoring the situation for 2016 and it does not seem to be an issue yet. I miss Michael for his attempt to balance Mark's ultra bullish commentary, and for his educational posts since it's always nice to learn things from a finance professional. The last proclamation from him though I seem to remember is his bullish commentary for AERO when it was sitting above 4 a share Anyway, thanks for the replies - I posted this name partially since it hit the bottom of a trendline on the risk/reward chart: [SIMO_RR](//muut.com/u/pttresearch/s1/:pttresearch:mEif:simo_rr.jpg.jpg)

Remi
Fri, 14 Aug 2015 11:50:56 GMT

Yikes, looks like Matt also picked Unipixel too at some point, that has been dropping like a rock for some time. I had that one on my short candidate list actually before.

Kyle
Fri, 14 Aug 2015 19:30:18 GMT

Micron (MU) was one of his darlings and look what happened there...I see a pattern developing...short everything Matt M suggests.

Remi
Sat, 15 Aug 2015 04:29:56 GMT

I believe I remember reading Matt initially invested in MU at 3 dollars a share or something to that effect. It's unfortunate he introduced it to the subs near the top of its cycle, it's better to wait on that one since its momentum has yet to reverse - DRAM prices are still falling and its more exposed to that (and in PCs) than NAND where things look interesting. SIMO has no exposure to DRAM, its margins are stable to up and it is gaining momentum while many other semiconductors are flat to down. As for some of his other names, I prefer to wait to see a profit before going heavy into a stock. Matt seems to go for moonshots and he hits 10 baggers every once in a while.

Remi
Sat, 14 Nov 2015 04:24:58 GMT

In case by chance anyone shorted Western Digital, it's time to cover that short I think. The deal Western Digital has going on to acquire Sandisk and to sell a stake to China's Tsinghua/Unisplendour, if approved, will create a pretty synergetic global powerhouse. Sandisk's 3D NAND technology for SSDs is exactly what Western Digital needs.

Remi
Wed, 30 Mar 2016 23:53:55 GMT

40 dollar target reached, not much short term upside left at this point according to technicals - maybe closer to 40.50 if it matches old pattern exactly. Only took 7 months, hope someone benefited from this one

Tobias
Sat, 02 Apr 2016 07:38:47 GMT

Hi Remy, I have bought a few shares last year based on your post and after i took a closer look, sold it with a small profit. ... too early, I left the train before it accelerated. :-( Never mind, I'll have a look at your last idea (Medicure). Looks like I owe you more than a few drinks. :-) Thank you for sharing long ideas, always appreciated. regards, Tobias

Remi
Thu, 07 Apr 2016 13:06:40 GMT

darn it - looks like SIMO just pre-announced a blockbuster quarter... thinking of getting back in now....