Author Topic: SMCI - Super Micro  (Read 15959 times)

writser

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Re: SMCI - Super Micro
« Reply #70 on: August 16, 2019, 09:46:25 AM »
Yes, the reshuffles and the new board member are good. 164m cash was a bit sloppy from me, that was the previous quarter.

- Premium multiple isn't something that's even on my mind here.

I didn't mean I expect this to trade at a 50x P/E ratio or something like that. But what I was trying to say is: where do you think this should trade? It's not _super_ cheap at the moment. Maybe it is when you look at an EV/EBIT basis but I think that that is a bit optimistic as the cash will be plowed back into the business. After today's run we're trading at a TTM P/E multiple of ~11, slightly above tangible book and a EV/EBIT of 6 (guesstimate)? What I'm saying is I'm not really comfortable buying at a 11x multiple saying it should trade at a 15x multiple. First of all that's not my cup of tea and second, this is a business with some issues so I'm not actually sure a much higher multiple is warranted. I guess it is cheap but I like to have something more tangible.

Do you have a target price in mind and if so, how did you arrive at it? I've been in an out twice or something opportunistically but I find it hard to peg a price on the business.
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scorpioncapital

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Re: SMCI - Super Micro
« Reply #71 on: August 17, 2019, 02:59:29 AM »
Do China Tarriffs in some ways effect them? I know Intel and some of the others were impacted somewhat.

Yes, they have been and continue to be negatively impacted. They work closely with Intel, so I would imagine there's a similar dynamic.

I read they moved some manufacturing to Taiwan...although in theory Taiwan is still China, not sure if that means things going in or out of Taiwan from the USA are affected the same way.

It may be a conspiracy theory, or maybe just local cultural connection but the CEO is of Chinese heritage. Do you think China might somehow make exceptions to a more rigid import or export regime for companies like this?

Foreign Tuffett

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Re: SMCI - Super Micro
« Reply #72 on: August 19, 2019, 07:07:28 AM »
Do China Tarriffs in some ways effect them? I know Intel and some of the others were impacted somewhat.

Yes, they have been and continue to be negatively impacted. They work closely with Intel, so I would imagine there's a similar dynamic.

I read they moved some manufacturing to Taiwan...although in theory Taiwan is still China, not sure if that means things going in or out of Taiwan from the USA are affected the same way.

It may be a conspiracy theory, or maybe just local cultural connection but the CEO is of Chinese heritage. Do you think China might somehow make exceptions to a more rigid import or export regime for companies like this?

CEO is from Taiwan. And no, I don't think that.

Foreign Tuffett

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Re: SMCI - Super Micro
« Reply #73 on: August 19, 2019, 07:31:53 AM »
Yes, the reshuffles and the new board member are good. 164m cash was a bit sloppy from me, that was the previous quarter.

- Premium multiple isn't something that's even on my mind here.

I didn't mean I expect this to trade at a 50x P/E ratio or something like that. But what I was trying to say is: where do you think this should trade? It's not _super_ cheap at the moment. Maybe it is when you look at an EV/EBIT basis but I think that that is a bit optimistic as the cash will be plowed back into the business. After today's run we're trading at a TTM P/E multiple of ~11, slightly above tangible book and a EV/EBIT of 6 (guesstimate)? What I'm saying is I'm not really comfortable buying at a 11x multiple saying it should trade at a 15x multiple. First of all that's not my cup of tea and second, this is a business with some issues so I'm not actually sure a much higher multiple is warranted. I guess it is cheap but I like to have something more tangible.

Do you have a target price in mind and if so, how did you arrive at it? I've been in an out twice or something opportunistically but I find it hard to peg a price on the business.

I don't have a target price here. I doubt anyone knows the intrinsic value (a phrase I dislike) of something like this given the significant uncertainty and lack of full financials.

I think an argument could still be made here that the company trades around liquidation value. That's still too cheap for a company that is consistently profitable and has shown impressive growth (they did significantly more rev last Q than in all of FY 2010).

Hopefully they will grow. If they don't grow then they will have the cash. If they do grow...well, the market likes companies that are growing (and rightfully so).

All this said, I did sell part (not all) of my position on Friday. So I have taken some chips off the table, so to speak.


Foreign Tuffett

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Re: SMCI - Super Micro
« Reply #74 on: October 28, 2019, 10:37:44 AM »
Now completely out of this. Very well could go significantly higher if/when it gets financials caught up, but I think that at this point the market is pricing it more like a "normal" company and less like a fraud/spy chip installation facility/overseas arm of the Chinese government.

writser

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Re: SMCI - Super Micro
« Reply #75 on: November 15, 2019, 01:09:06 AM »
From the call yesterday:

Quote
Now, let me comment on the progress of our remaining delinquent SEC filings. Last quarter, we reported that we had submitted our fiscal 2018 financials for audit. We're now able to report that we had also completed work on the fiscal 2019 financials under both the 605 and 606 revenue recognition standards and submitted them for audit at the end of September.

Concurrent with the financial statement audit, we have continued the testing and assessment of our internal controls over financial reporting. As a result, we have prepared drafts of our SEC filings. The team remains laser focused on becoming fully current on our SEC filings, which also includes the 10-Q filing for this first quarter of fiscal 2020.

Net cash now ~$220m.
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writser

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Re: SMCI - Super Micro
« Reply #76 on: December 19, 2019, 02:36:24 PM »
Finally they are current on their financials (link).
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Foreign Tuffett

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Re: SMCI - Super Micro
« Reply #77 on: December 20, 2019, 07:44:09 AM »
Finally they are current on their financials (link).

Yeah, definitely good news. SEC filings now current through June 30th 2019. If one believes that all or most of the audit investigation expenses (see page 7 of the presentation released this morning) will be going away soon then this is still cheap with the caveat that it's nowhere near as cheap it as was when I started posting in this thread.

Encouraged by the news, I was able to get my grimy hands on some shares before the market opened at just a smidge above where the stock closed last night.

Re: The call this morning. With the caveat that I can't understand the CEO's heavily accented English, little new info was provided beyond what is in the new filings and IR presentation. They do plan on scheduling an analyst day once they are trading on the NASDAQ again.


writser

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Re: SMCI - Super Micro
« Reply #78 on: January 10, 2020, 10:36:52 AM »
SMCI up ~12% today to ~$26 after it announces a relisting on Nasdaq and a small bump in guidance. Though I'm happy with my decision to sell around $22 in March 2019 one could make an argument that I should have sat on my hands a little longer while the story played out (i.e. restatements completed, uplisting, etc.). Still, that's easy to say in hindsight in a raging bull-market. I still have no clue what 'fair value' is here. Also, value investors sell too soon .. Or at least that's what I keep telling myself.

Also I'm wondering if Nate ever pulled the trigger.
When you are dead, you do not know you are dead. It's only painful and difficult for others. The same applies when you are stupid.

@thewritser