Audio Archives
Client Letters
OID Features Online
OID.com Exclusive
Features
Indexes:
Investors
Funds et al.
Companies &
Investments
Contact Us
About Your
User Name
& Password
Free Reprint
Online Excerpts
Investors in
Our Latest Edition
Companies &
Investments in
Our Latest Edition
About OID
Subscribe
Online Advertising
Online Classifieds
Employment
Opportunities
Portfolio Reports
Home Page
THIRD AVENUE FUNDS'
MARTY WHITMAN ET AL.
(continued from preceding page)
OID: Including its chief operating officer, I gather.
Jensen: That's right, although I believe that was just part of their slimming down process. Art Buckland is basically going to do that guy's job for now. They're just tightening their belts and saving some money.
[Editor's note: On December 21st, the company also announced the resignation of its CFO (and his immediate replacement by the Vice President and Senior Analyst to the CFO at Fidelity Investments).]
Jensen: Also, they're in the process of expanding their manufacturing capacity. And I mention that because when someone does something like that and the cycle starts to turn against 'em, as it has with C.P. Clare, one result is low capacity utilization. And that really hurts a company's earnings in the short run.
OID: But you think it's a good thing over the long run.
Jensen: I do. In the past, C.P. Clare has been capacity constrained. And that facility should eventually enable them to lower their costs, improve their margins, etc. So they've invested money in their business over the last couple of years. And when the cycle finally turns and demand comes back, I have to believe its earnings will come back, too - as Marty says - stronger than ever. In any case, we think it's going to be nice.
But for now, business conditions are soft. And its results are temporarily depressed. However, I don't think it deserves to be trading at around 70% of book value....
BUT IT IS DOMINANT IN TERMS OF TECHNOLOGY....
OID: And Silicon Valley Group also looks very cheap. What's the story there?
Lie: Silicon Valley Group is in a somewhat more competitive industry. Their technology's very leading edge. They're focused on deep ultraviolet [UV] technology.
OID: Super. Remind me to ask you what that is another time...
Lie: Their big competitors in it are ASM Lithography out of the Netherlands and Canon and Nikon in Japan. So they have really big competitors.
They're trying to get their customers to move from their prior generation I-line to their deep UV. And it's happening. They are moving. But given the state of the semiconductor industry, it's been happening more slowly than it would have otherwise.
OID: So the extra deep discount is based on investors being in a deep ultraviolet funk because of that delay?
Lie: That's right. They have really good technology. Even Silicon Valley's competition will tell you that. Their customers include Intel, IBM and Motorola. And, certainly Intel - given its status as the 800-pound gorilla of the semiconductor manufacturing business - should give you an idea of just how good Silicon Valley's technology is.
Whitman: And an indication of how highly we regard it is that we own 16-17% of Silicon Valley's common stock.
OID: Sounds like true love to me. But how would you rank its management?
Jensen: Its chairman, Papken Der Torossian, has been around forever.
Page 11 of 19
10 | 11 | 12 | 13 | 14 | 15 | 16 | 17 | 18 | 19
|
(Return to Table of Contents) |
(continue to the next page) |
©Copyright 1996-2007 Outstanding Investor Digest, Inc. All rights reserved.
295 Greenwich St., Box 282, New York, NY 10007 (212) 925-3885