Some interesting comments from Kevin Landis, manager
Firsthand Technology Value
fund was an oxymoron, and, therefore, I couldn't
quite see putting out the $10,000 nut it took to get
into his Technology Value Fund. Little did I
know I couldn't afford not to. Without the benefit of
my money (or my jinx), the fund was up 23.7% in
1998, and an incredible 190.4% in 1999, which
Morningstar ranks as 12th among 61 technology
funds. It gets even better. Landis' five-year return
is, quite simply, the best in the business, with his
Value fund ranking No. 1 on Morningstar.
With such success, Landis had broadened his
team and now has four funds, Firsthand
Communications, Firsthand Technology
Innovators, Firsthand Technology Leaders
and Firsthand e-Commerce. And despite the
breadth of interest in tech stocks, Landis still says
there are vast undiscovered sectors that retail
investors are missing out on.
Kevin Landis: Look at JDS Uniphase
(JDSU:Nasdaq - news), that's a poster child right
now.
TSC: Everybody loves it, they can do no wrong.
They're the clear leader with defensible technology
in a huge, growing market.
Kevin Landis: Right, and people are saying,
"You're an idiot if you don't own JDSU." But wait 'till
they guide numbers down once. Then it'll be, "Look
out below. What are we paying for this thing? Oh
my gosh, do you know how many other people are
in this business?" and so forth.
TSC: Do you own this stock?
Kevin Landis: Back when it was Uniphase we
owned it, but not now.
"The average investor's attitude toward
tech stocks is the picture of
ambivalence, right now."
TSC: But people in tech want to be in optical
networking. I think they buy this because they want
to invest in optics and don't know what else to buy.
It's a proxy.
Kevin Landis: Yes, that's exactly what happens.
Then other names like Corning (GLW:NYSE -
news) come out of the woodwork, and people
realize that that's a proxy, too. That's why those
stocks do well. Let me stress that even though we
don't own JDSU, we are very big on optics.
TSC: So how does the average investor get beyond
the proxies and own some real companies with
more upside?
Kevin Landis: Well, first of all, you have to realize
that just because you've realized that a certain
sector is hot and full of promise, that doesn't mean
you're going to be able to invest in it all you like.
Everyone else has discovered the same stocks that
you have and they've bid them up. Then your
opportunity is just that much smaller.
TSC: Great. Damned if you do, damned if you
didn't. Give me some help here!
Kevin Landis: What we do is we go in there and
we dig and try to find other companies that aren't
quite so famous yet, that are in that game, and
maybe not direct competitors, but maybe working
elsewhere on the supply chain. Up and down the
food chain.
TSC: So you try to get a grand view of the supply
chain, you talk to the companies that are in that
world, and say, "Who else are you buying stuff
from?"
Kevin Landis: Yes, and, "Who do you do business
with?" Usually it's a whole gang of companies. It's
easy to lose sight of that, because the Wall Street
angle is simplistic: "So and so, they do this." That's
your proxy argument. But there's really a whole
collection of companies that get together to get the
finished product out the door.
TSC: But it's not that simple. I can't own stocks, but
I've tried to do this picking stories. I had meetings
with SDL (SDLI:Nasdaq - news), and they twice told
me Kodak (EK:NYSE - news) was an important
partner of theirs. So I called up Kodak and Kodak
has no idea what they're doing in optical networks!
Kevin Landis: [Laughter]
TSC: So I never wrote about Kodak's fabulous
ownership of patents and scientists and technology
in optics, because it seems to me that they don't
know how to use that. So you can't just find parts of
the supply chain -- you have to connect the dots.
Kevin Landis: Right, you've got to do your
homework. I'll give you another one where we don't
own it because I really haven't gotten to know the
company well enough yet, but apparently a lot of
the basic material science is coming out of 3M
(MMM:NYSE - news).
TSC: Really?
Kevin Landis: Yes. There may be a story there,
too. We've got a couple of others we're building
positions in.
TSC: Which means you won't tell me jack.
Kevin Landis: One where we've pretty much
finished our buying, that I can talk about it, is
Finisar (FNSR:Nasdaq - news).
TSC: They took off this week.
Kevin Landis: They make the subassemblies. It
would seem like making subassemblies is no big
deal and that anybody could do it.
TSC: I've tried. It's harder than it looks.
Kevin Landis: [Laughter]
TSC: Seriously, how did you pick Finisar?
Kevin Landis: Think of it this way, Finisar's
supplier list includes JDSU. Their customer list
includes Brocade (BRCD:Nasdaq - news) and
Cisco (CSCO:Nasdaq - news).
TSC: Those are companies that are doing a little
business.
Kevin Landis: Yes. So Finisar is absolutely in that
food chain. Their business is ramping up pretty
much as fast as they can manage the growth. So
that's pretty nice. They're right in that sweet spot.
thestreet.com
I read it this way Kevin Landis: One where we've pretty
much
finished our buying, that I can talk about it, is Finisar
(FNSR:Nasdaq - news).
TSC: They took off this week.{END} edited
STLW make's the subassemblies. It
would seem like making subassemblies is no big
deal and that anybody could do it.
Think of it this way, Stratos's customer list includes
Nortel, Cisco, Alacatel, Agilent and Lucent...
Yes. So Stratos, is absolutely in that
food chain. Their business is ramping up pretty much
as fast as they can manage the growth. So that's
pretty nice. They're right in that sweet spot.
hmmmmmm, I guess that is why STLW said this:``As of the
end of our first quarter
(July, 2000), our backlog increased 88% to $47 million,
from our
ending fourth quarter (April, 2000) backlog of $25 million.
We experienced an 82%
increase in our
optical subsystems backlog and a 104% increase in our
optical components
backlog. This
expansion will allow us to add 50% to our Gigabit-speed
optical subsystems unit
capacity by the
end of October 2000, with a 100% total increase in unit
capacity by end of calendar
2000. The
new space will also provide for a 200% increase in our
optical component
manufacturing and
precision fiber optic termination capacity in our Chicago
facility.''
``In addition to continued demand in our existing SC fiber
optic interface optical
subsystem
business and fiber optic connectivity line, we are now
experiencing strong growth
from new
product lines. Small Form Factor optical subsystems using
the half-size LC fiber
optic interface,
high-density backplane fiber optic connectors, and
precision optical terminations for
telecommunication OEMs are all strong incremental
businesses that have begun to
develop over
the last few quarters.''
``Recent developments in the Metropolitan and Wide Area
Networking markets and
the telecom
application space indicates increased demand for
products in this sector. We
expect that our
recent product announcements will incrementally benefit
from demand in this area.
Stratos
recently announced an ATM SONET OC-48 line of optical
transceivers, Telecordia
(Bellcore)
Standard compliance for our 1x9 SC optical transceivers,
and availability of
miniaturized OC-3
and OC-12 optical transceivers-all products addressing the
MAN, WAN and
Telecom markets.
The addition to the Chicago facility, as well as equipment
investments in our
Florida operation, is
expected to take advantage of this new market demand.
``The expansion to our Chicago campus will support our
efforts to meet our
aggressive growth
plans. Stratos' advanced product development,
industry-leading optical line
transmission and EMI
performance, and responsiveness to our customer's
time-to-market requirements
have earned
our success with the market's leading OEMs. This
increased capacity will help us
meet existing
customer needs and to proactively market new advanced
product offerings, as well
as the more
highly engineered optical solutions that play into the
technical strengths of our
company.''
Stratos Lightwave, Inc. develops, manufactures and sells
optical subsystems and
components
for high data rate networking, data storage, and
telecommunications applications.
These optical
subsystems are used in local area networks (LANs),
storage area networks
(SANs),
metropolitan area networks (MANs), wide area networks
(WANs), and central
office networking
in the telecommunications market. The company also
designs, manufactures, and
sells a full line
of optical components and cable assemblies for use in
these networks.
cheers |
