Technology Stocks : Wennerstrom Semi Equipment Analysis
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To: Donald Wennerstrom who wrote (77699)11/10/2017 9:13:59 AM
From: robert b furman1 Recommendation

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Hi Don,

Yesterday I was listening to Brks webcast.

As the webcast progressed I was impressed with the future opportunities presented by the acquisitions and a whopping 38 million in cash flow.

15 to 20 percent growth in both industry segments and a 40% margin - which thet believe they can bottom line 18% non gaap.

Management indicated that the semi industry looked strong into all of 2018 after discussing capex with their major customers - fabs a bit off in H 1, but memory doing well in the first half.

Life sciences is growing so well that if and when semi's do slow down, they may carry the ball with continued growth by 2019 (this quarter ended their fiscal year - not on a calendar year basis).

They have entered into sample storage for immunology with the acquisition of 4ttitude. Something they were already storing. This will add to the consumable buisness in addition to the FliudX consumables.

They are so excited about the growth and leadership potential of the life sciences that they have taken on a 200 million line of credit so they can pursue additional acquisitions and roll up the global opportunities.

It was a very upbeat webcast and then I looked over at my watchlist and saw they were down over 6 points.

SHEESSH - it is amazing what a market maker can do, as he sells out shares short and then creates a bear raid on the stock at the open.

Over a million shares dumped into the first hour!

This morning some bank understands the reason the stock dropped is because two of the board members each sold 2900 shares - give me a break.

Brks has had a strong run and price has flown into the mid thirties.

The MM sold off shares short that he created and fed the market into decline as recent buyers bailed and continued the sell off in volume but not in a price decline.

Market maker needed inventory and got it with his bear raid-imo.

This is an old game and a reset is now in progress.

Two acquisitions this last quarter and 7 million in dividend payments and these guys still have 104 million in cash.

They modeled the debt interest as hurting eps by 3 cents a share per year.

These guys are so conservative - they hate debt but almost appear giddy by the range of opportunities that are availing themselves to them.

They have taken their cryo/ robotic technology from advanced semiconductor manufacturing and transferred it to storage of pharma samples and now biologic samples.

They can guarantee 100% no human touching of the samples, complete with thermal records and location of the samples.

The recent acquisition now takes them into immunology sample storage and addresses the biotech industry.

They store the samples of human tissues that the biotech industry finds to be successful in curing human illnesses.

It is a behind the scenes service to a huge growing industry!

Very much like Cohu selling test handlers to the semi chip makers of the world.

It doesn't matter who makes the best widget - they all need to be tested.

In Brks situation - it doesn't matter who creates the best cure - they all need to be stored.
They all need to be stored for medical test procedures and for pharma litigation protection.

These guys are going to build a company that will shed off dividends as far into the future as the eye can see.

This is a long term buy and hold stock in my mind.

Any dip is a time to add to!

The reset will likely take another quarter - but there is a buy opportunity at hand here - heck it could be a rare v bottom.

I hope not as I'd like to add to if we can get some year end tax loss selling in late December.

My greatest fear at this point is a buyout by a big drug maker.

A buyout of this small cap and a sale of the semi business to Amat would be a clever play and get the bio-science/life science division on the cheap.

CEO Schwartz holds one of the best webcasts I've ever listened to. You can read his conservative ways and yet a brilliance of capabilities exudes from his conversation with analysts.

At the end of each question he thanks the analyst for their excellent questions - it invites a discussion of their capabilities - unlike so many that scared to mention their wins / capabilities or who they do business with.

Guess you can tell I'm a cheerleader for this great company!

In short BUY THE DIP!!!!

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