SIMO - Silicon Motion Technology Corporation

[Spekulatius]

This is a fairly cheap semiconductor fabless manufacturer with their main product being memory controller.

 

The thesis  condenses in this post by Elroy from another message board. Elroy has been tracking this stock for years and generally is spot on:

https://www.siliconinvestor.com/readmsg.aspx?msgid=32950278&srchtxt=SIMO

 

This is a stock that Greenblatt would like with high ROI and good cash conversion and a cash rich balance sheet. Gross margins are stable around 50%, but products are somewhat commoditized and revenues can be lumpy. Balance sheet is cash rich.

[Arski]

Really interesting stock. I've taken a small position in SIMO, but can't get a good picture about the downside of Silicon for if and when their 'commodity' product will be selling for lower prices and how low these prices can get.

 

In the article you sent, he talks about Alibaba and how they could serve for high growth for SIMO. I couldn't any article about it. Maybe someone else has one or has more knowledge about this and the industry of SIMO in general.

 

After all the ROIC of the company is quite high year after year.

[Spekulatius]

Really interesting stock. I've taken a small position in SIMO, but can't get a good picture about the downside of Silicon for if and when their 'commodity' product will be selling for lower prices and how low these prices can get.

 

In the article you sent, he talks about Alibaba and how they could serve for high growth for SIMO. I couldn't any article about it. Maybe someone else has one or has more knowledge about this and the industry of SIMO in general.

 

After all the ROIC of the company is quite high year after year.

 

I don’t know much about their Alibaba connection, except that Alibaba pops up on their CC. I don’t think at this point it is an important business but may become more important in the future.

https://app.tikr.com/stock/transcript?cid=2672153&tid=22894213&ts=2127249&e=691062925#

 

The ASP for their controllers come down over time, but I don’t see any indications of severe pricing fluctuations like with memory chips - it is more the volumes that fluctuate than the pricing. Their gross margins were pretty stable for years around 50% so costs come down together with prices apparently.

[Spekulatius]

Stock now at ~$45 and seems to get done bids now after comments on a CS sponsored IR presentation possibly.