Haasje Posted February 12, 2015 Share Posted February 12, 2015 -Owner operator -After selling the majority of the business the company has about 2x the OPEX it really needs -For the past few years they have been looking at small-medium acquisitions to build out the company but Richardson didn't like the pricing on deals (not saying he is wrong) -Some legacy costs of an expensive IT systems and infrastructure appropriate for the previously larger company are only falling off this fiscal year $2.5 mil of annual expenses -126 mil market cap -113 mil in cash -136 mil revenue -(3.34 mil) ebitda I'm thinking the stock is getting punished real hard for being so passive while incurring losses. If they either pay out the cash and slash their ambitions (get rid of excess OPEX) to expand OR make a few reasonable acquisitons, it's going to be rerated by the market at least closer to what a solid price for a private market transaction would be. Wording on the recent earnings call suggests to me some acquisitions are imminent. I'm long but your variant views are very welcome :) Link to comment Share on other sites More sharing options...
mjohn707 Posted February 12, 2015 Share Posted February 12, 2015 I looked at this before and I remember thinking that the executive compensation was a little on the high side, did you notice anything out of the ordinary? Link to comment Share on other sites More sharing options...
Haasje Posted February 12, 2015 Author Share Posted February 12, 2015 Yes it's quite high. About $3mil for the executive team. I think two factors play into that: the fact that its a slimmed down business with legacy ideas about salaries and multiple VP's and the second one being the owner operator kinda controls the company, so it's not something that's easy to change. He got some flack about it on the recent earnings call, it reads like an awkward exhange. Link to comment Share on other sites More sharing options...
mjohn707 Posted February 12, 2015 Share Posted February 12, 2015 Yikes, that's definitely a chunk for a company with 100M in revenue Link to comment Share on other sites More sharing options...
mjohn707 Posted September 14, 2015 Share Posted September 14, 2015 Haasje, Are you still invested in the company? At current prices it looks like we're in net-net territory Link to comment Share on other sites More sharing options...
Haasje Posted September 15, 2015 Author Share Posted September 15, 2015 I am. Richardson is taking his sweet time building up the revenue side, only making small acquisitions while maintaining a global organisation. The owner/operator appears to want the share price to drop so he can buyback shares at a lower price. I wrote up a short piece covering one of the latest earnings call which was incredibly hostile: http://seekingalpha.com/article/3359945-richardson-electronics-shareholders-confront-management-about-its-failure-to-create-value It is incredibly cheap but you have to deal with Richardson who does not inspire confidence he will be creating a ton of shareholder value soon. Ultimately creating shareholder value would be to his benefit but it is not clear he cares about that. Link to comment Share on other sites More sharing options...
mjohn707 Posted September 16, 2015 Share Posted September 16, 2015 Just read the transcript of the last earnings conference call and ouch, they were pretty tough on Richardson. It seems he's committed to reinvesting in the business which looks like a real dog. There's definitely value here at this price unless management decides to spend everything on the turnaround. How do you see this playing out? I really don't have a sense of the probabilities with the dual share class and all Link to comment Share on other sites More sharing options...
jawn619 Posted September 16, 2015 Share Posted September 16, 2015 Looks interesting. Thanks for post. will dig further and post my thoughts Link to comment Share on other sites More sharing options...
Haasje Posted September 16, 2015 Author Share Posted September 16, 2015 What I am a little bit unsecure about, is Richardson goals. I am not sure this owner/operator is sufficiently driven/greedy ;) to allow us to profitably ride along with him. Right now I errr on the side of assuming he is rational and wants to achieve a high return over the LONG term. He is clearly not concerned about the stock price in the short term. Originally Richardson was going to buy some small companies and then scale them up by pushing their products through the companies existing global network. The problem is he first complained there were no cheap companies to acquire and is now suggesting they are going to grow organically which is just going to take far longer and this is very uncomfortable for shareholders given the cost structure and the limited visibility we have to the chance of succes. For those of you who have SA PRO access or other access, last year I also did a more comprehensive write-up (a PTI) that is behind their paywall now: http://seekingalpha.com/research/11236431-bram-de-haas/2990493-richardson-electronics-limited-downside-risk-with-two-potential-catalysts Link to comment Share on other sites More sharing options...
mjohn707 Posted September 17, 2015 Share Posted September 17, 2015 Looking into it a bit more, I'm really skeptical that management can grow this business, and I think we're going to see more operating losses in the meantime. I'm not sure how this will play out. If anyone is interested, I'm attaching my spreadsheet with a 5 year income statement summary and a calculation of liquidating valuerichardson_electronics.xlsx Link to comment Share on other sites More sharing options...
Haasje Posted September 17, 2015 Author Share Posted September 17, 2015 Thanks MJohn, you have liquidation value around $9 right? I'm not 100% sure from the top of my head but the cash may need a small haircut, it is probably not all repatriated. Link to comment Share on other sites More sharing options...
mjohn707 Posted September 18, 2015 Share Posted September 18, 2015 Yeah about $9. I forgot about the foreign cash, but if I'm reading my notes from the 2014 annual correctly it was about 50% North American and 50% Asian and European then Link to comment Share on other sites More sharing options...
mjohn707 Posted May 4, 2018 Share Posted May 4, 2018 Yeah about $9. I forgot about the foreign cash, but if I'm reading my notes from the 2014 annual correctly it was about 50% North American and 50% Asian and European then I'm out of this today, anyone still holding? Link to comment Share on other sites More sharing options...
samwise Posted November 6, 2018 Share Posted November 6, 2018 Yeah about $9. I forgot about the foreign cash, but if I'm reading my notes from the 2014 annual correctly it was about 50% North American and 50% Asian and European then I'm out of this today, anyone still holding? No I had sold a while back at lower prices. This is one where I got frustrated after the rally in 2016 to $7 fizzled. I would have had a better IRR by selling there. So next time it got up to those prices (more than a year!) I sold. Price is drifting back down now. You seem to have gotten almost the top on this one. Congrats! Link to comment Share on other sites More sharing options...
samwise Posted May 25, 2019 Share Posted May 25, 2019 Back down to net net, but with an unquantifiable liability. https://litigationtools.maxval-ip.com/UnifiedPatentViewDocument/home/index?caseid=209082 Getting sued by Varex imaging for patent infringement. Anyone in this again? I can't quantify the liability and don't have a position. Link to comment Share on other sites More sharing options...
mjohn707 Posted May 25, 2019 Share Posted May 25, 2019 Back down to net net, but with an unquantifiable liability. https://litigationtools.maxval-ip.com/UnifiedPatentViewDocument/home/index?caseid=209082 Getting sued by Varex imaging for patent infringement. Anyone in this again? I can't quantify the liability and don't have a position. It could probably bounce with an improvement in earnings, but I have this on my watchlist for a little cheaper. As they've spent the cash the liquidating value isn't looking as good as it did a few years ago Link to comment Share on other sites More sharing options...
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