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NXPI -NXP Semiconductors N.V.


ValueMaven

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things that dont make sense...

 

…I was talking to Sam Zell, a great real estate investor, and all he does, he reads the newspaper and all he’s looking for are things that don’t make sense. So I said, “Give me an example, Sam.” And he says, “Okay. I’m reading the newspaper and I see that there’s a Starbucks that’s just opened up (this is like 15-20 years ago) in Mongolia.” And he thinks to himself, “Mongolia? I thought they drink tea. What’s with that?” He’s so curious about this because it makes no sense that he takes his private jet, flies to Mongolia, and he discovers that they’ve started mining. This was the beginning of the big China infrastructure build. And the only reason he knew about it was that “it didn’t make any sense.”

 

So I’m telling you that’s the key thing. People stumble on these ideas and they dismiss them. They go, “Eh, that doesn’t make any sense.” But I’m telling you that’s where the gold mine is; things that don’t make sense. That’s all I pay attention to now.

 

What I don't understand is all everyone talks about is how NXPI is cheap to the comps, etc. etc., and already trading at a nadir valuation, but yet the stock has thus far failed to go up. The other reason given is the busted merger arb, but at this point it's been long enough there should have been some price discovery - i.e., if some large value fund or large mutual fund wanted to buy, they would have. it is no longer about overhang, forced sellers, etc. i guess my question is if everyone agrees nxpi is at least relatively if not absolutely undervalued, how come the stock doesn't seem to move. it's not like there is some gotcha bear case that is well known as in some battleground stocks. this is just something that has given me pause

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Maybe the valuation just isn't as attractive as a lot of people seem to imply (I'm talking absolute). What's the FCF yield today and what kinda growth rates can one expect? Whenever I looked I just didn't find it attractive but I probably don't fully grasp the business. I'm very simple and like to get an equity FCF yield plus 10 pct. as well as some growth.

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things that dont make sense...

 

…I was talking to Sam Zell, a great real estate investor, and all he does, he reads the newspaper and all he’s looking for are things that don’t make sense. So I said, “Give me an example, Sam.” And he says, “Okay. I’m reading the newspaper and I see that there’s a Starbucks that’s just opened up (this is like 15-20 years ago) in Mongolia.” And he thinks to himself, “Mongolia? I thought they drink tea. What’s with that?” He’s so curious about this because it makes no sense that he takes his private jet, flies to Mongolia, and he discovers that they’ve started mining. This was the beginning of the big China infrastructure build. And the only reason he knew about it was that “it didn’t make any sense.”

 

So I’m telling you that’s the key thing. People stumble on these ideas and they dismiss them. They go, “Eh, that doesn’t make any sense.” But I’m telling you that’s where the gold mine is; things that don’t make sense. That’s all I pay attention to now.

 

What I don't understand is all everyone talks about is how NXPI is cheap to the comps, etc. etc., and already trading at a nadir valuation, but yet the stock has thus far failed to go up. The other reason given is the busted merger arb, but at this point it's been long enough there should have been some price discovery - i.e., if some large value fund or large mutual fund wanted to buy, they would have. it is no longer about overhang, forced sellers, etc. i guess my question is if everyone agrees nxpi is at least relatively if not absolutely undervalued, how come the stock doesn't seem to move. it's not like there is some gotcha bear case that is well known as in some battleground stocks. this is just something that has given me pause

 

 

Nowadays people know the price of everything and the value of nothing.

 

-VM

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Maybe the valuation just isn't as attractive as a lot of people seem to imply (I'm talking absolute). What's the FCF yield today and what kinda growth rates can one expect? Whenever I looked I just didn't find it attractive but I probably don't fully grasp the business. I'm very simple and like to get an equity FCF yield plus 10 pct. as well as some growth.

 

A lt of semiconductor stocks have become very cheap, just look at AMAT, TSEM. While these are not great comps for NXPI, it shows that the sentiment has soured.

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The quarter was great - margins are very strong and the depth of the portfolio was really shown!!  Management is actively buying back an insane amount of stock... $5bn so far in the QUARTER....leverage is low and free cash flow is high.  The board approved another 15mm share repurchase by the end of the year I believe.  A lot better then the Street was expecting...If you get earnings growth or cyclical growth period in the next 24 - 36 months EPS could be north of $10.  NXPI has never been your typical semi company...so even putting a median multiple gets you well north of $110 - $120 per share.  QCOM really should have tried to close this - even the $127.50 price would have been a steal!!

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  • 1 month later...

QCOM has spent all the money on buybacks.  Would 1) need to do a stock deal now and 2) need the companies to trust China and 3) would take 6+ months to close. 

 

Odds this happens are about 1%.  But the stock will probably go up on Monday a few bucks regardless.

 

Agree, that boat has sailed.

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  • 2 months later...

Its had a nice run, but that's probably over now. Anyone else getting tired of these tech companies consistently lowering their forward guidance, just so they can "beat" the lower number next quarter?

 

http://www.globenewswire.com/news-release/2019/02/07/1711817/0/en/NXP-Semiconductors-Reports-Fourth-Quarter-and-Full-year-2018-Results.html?culture=fr-ca

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  • 4 weeks later...

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