| From: tktrimbath | 11/5/2015 9:24:05 PM | | | | | | GIG and earnings
I compared three stocks to gain some perspective on investing in startups: AMSC, GIG, and MVIS.
(Cross-posted to all three boards, because, how else should I do it?)
When good news isn't good enough.
Also, getting to listen to, "I told you so"; but after a few decades of investing in small companies, I'm used to that. (Besides, when it works, it works well - and frequently without commentary. Interesting.)
It is a long discussion which is why I post it to my blog.
trimbathcreative.wordpress.com
The short version is, good news is measured against investor expectations, not management's assessment. |
| | Gigoptix, Inc. | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last Read |
|
| From: tktrimbath | 12/31/2015 6:30:18 PM | | | | | | My EOY review of GIG
INTRO Here's my semi-annual exercise to see if I remember why I own the stocks I own, and so I can check back and see if their stories have changed. I post in case it helps others too.
GigOptix
GIG (market cap was $0.054B mid 2015 is $0.135B EOY2015)
GigOptix builds high speed electro-optical switches for communications networks. If you like a fast Internet, you're encouraging the use of their products. GigOptix is also a small conglomerate, a company that is building itself up through mergers and acquisitions. Those mergers and acquisitions have complicated the company's financial reporting, which may have discouraged some investors. The company was also below a $100M market cap until recently, which may have discouraged some investors. The technology is technical, difficult for many to understand, which may have discouraged some investors. Recently, however, they became profitable (even according to GAAP). The stock has appreciated about 150% in the last six months with a Price/Book of about 2.1 and a Price/Sales of about 3.3 which suggests room for growth. In 2016, company sales are expected to grow 21.5%, with a history of under-promising and over-delivering. The stock may command a premium. My rule of thumb is a Price/Sales of 6 for innovative products that have little competition. GigOptix does have competition, but few firms can produce the highest speed switches. As the speed and bandwidth requirements rise, GigOptix will possibly have fewer competitors because of some of their technical advantages (e.g. switches without moving parts.) I am also intrigued by the recent comment that their products may be included in consumer electronics, but they haven't revealed a product or product category.
I continue to hold, and (in true investor form) wish I'd bought more when I had the chance and choice. (This Investors Dilemma MVIS V GIG - trimbathcreative.wordpress.com
DISCLOSURE LTBH of LMRA since 2004. Holding because I have enough shares to positively impact my life, but not so many that I feel too exposed to risk.
(I've also collected links to the other discussion boards and my other stocks over on my blog trimbathcreative.wordpress.com |
| | Gigoptix, Inc. | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last Read |
|
| From: tktrimbath | 6/30/2016 6:12:04 PM | | | | | | My mid-year review of GIG
INTRO Here's my semi-annual exercise to see if I remember why I own the stocks I own, and so I can check back and see if their stories have changed. I post in case it helps others too.
GigPeak (was called GigOptix which was called Lumera which was spun off from MicroVision)
GIG (market cap was $0.135B EOY2015 is $0.111B mid2016)
GigPeak is a producer of high-end electro-optic communications switches. Through a variety of technologies, some of which have few moving parts, they are able to produce and sell the switches that allow the very high speed Internet connections that are considered necessities (that only a few years ago would have been considered luxuries). They have a few competitors, but many of them rely on complicated devices with moving parts that begin to encounter physical material limitations. GigPeak's products are the sorts of things that managers may not understand, but that the technicians can best appreciate. The result is a different kind of marketing, which is probably similar to the early days of f5. The products sell on technical merit more than on marketing splash. They have recently become profitable, but just barely, which produces a very high Price/Earnings ratio of ~ 40. If the trend continues, the company and the stock should attract more investment attention.
Two main issues make it less appealing for major investors. The company continues to grow through mergers and acquisitions, which confuses the financial reports. The company also has a relatively small valuation, which is under the limit for some firms, and which also limits the amount of funds a major investor can deploy. There are probably similarly-sized companies with simpler finances and technologies, which are easier for analysts to deal with. The financials are improving, but those two hurdles may limit the demand - until a major investor acquires a major holding, in which case others will possibly join in. Of course, that's one of the scenarios that makes investing in tiny companies a profitable strategy - if it happens.
I will continue to hold because my patience may finally be rewarded. I probably won't buy more because their growth strategy increases my confidence in the specifics of their operations. (Another bit of evidence that increases my doubt is the drop in the stock even the revenues are rising.) I also already have a large enough holding that if they maintain their roughly 20% growth in revenue, and if they attain a price/sales of ~6, then in about three years the stock could see a five-fold appreciation.
DISCLOSURE LTBH of LMRA since 2004. Holding because I have enough shares to positively impact my life, but not so many that I feel too exposed to risk.
(I've also collected links to the other discussion boards and my other stocks over on my blog trimbathcreative.wordpress.com |
| | Gigoptix, Inc. | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last Read |
|
| From: tktrimbath | 7/30/2016 11:06:39 PM | | | | | | Choosing GIG over MVIS - cross-posted with the MVIS board
I continue to hold almost equal numbers of shares of GIG and MVIS, which have a common heritage. GIG seems to be doing more with it than MVIS. Here's a description of how I resolved the dilemma I wrote about twelve months ago.
trimbathcreative.wordpress.com |
| | Gigoptix, Inc. | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last Read |
|
| From: tktrimbath | 8/12/2016 11:13:37 PM | | | | | | Buying a bit more GIG was a bit more than buying a bit of a stock. It may act as a milestone in a personal recovery.
Here's the longer version of the story.
http:// |
| | Gigoptix, Inc. | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last Read |
|
| From: tktrimbath | 10/21/2016 12:12:16 AM | | | | | | Rather than fill discussion boards with thousands of words, I prefer to post a few and add a link.
What's GIG worth? Someone over in Investor Village inspired at least a quick exploration of one possibility.
At 50+% growth and a market cap one-tenth of some of its competitors, there's at least some reason to think they can grow fast and go far.
trimbathcreative.wordpress.com |
| | Gigoptix, Inc. | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last ReadRead Replies (1) |
|
| To: tktrimbath who wrote (132) | 10/26/2016 6:26:47 AM | | From: squareroot | | | | | I think your expected growth rate is a tad high. Much of the growth in revenue is due to acquisitions and is not organic and the downside of acquisitions is the additional shares outstanding that impact EPS. I don't know what their true rate is but GIG looks decent here for a longterm hold with positive cash flow. Earnings release did not cause any excitement for the stock so it looks like it will trend lower for a bit. I'm waiting for $2.25 +/- to enter. BTW, love your blog! |
| | Gigoptix, Inc. | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last ReadRead Replies (1) |
|
| To: squareroot who wrote (133) | 10/26/2016 10:59:01 AM | | From: tktrimbath | | | | Thanks for the perspective. Usually investing in small companies avoids such M&A messiness. Always surprised when they find yet another small company to M or A.
Glad you like the blog. Looking forward to writing about good news. |
| | Gigoptix, Inc. | Stock Discussion ForumsShare | RecommendKeepReplyMark as Last Read |
|
| |
