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minor news and pricing notes ?3

11:24 09-Aug-17


Today's market dip seemed like a good opportunity to take a break from energy and round up a bunch of other minor news and observations, in roughly descending order of importance:

The swoon in IDTI shares has continued post-earnings along with a choppy market.  If the market really tanks in September, we could easily see better prices, but I continue to think this is a longer term opportunity.  To that end, I took note of Intel finally setting an August 21 release date for its Coffee Lake processors.  I suspect this will be of particular importance to IDT because, unlike recent iterations, these CPUs will require updated motherboards mostly because of the memory interface(s) that I've been beating the drum about.  Consequently, I think we'll start to see positive revisions to earnings estimates in the next quarterly report or two.

I recently got around to reading the transcript of the HiMax conference call and took particular interest in the discussion of Time of Flight vs Structured Light sensing.  HiMax was of course talking up the approach it has started with, but it is investigating ToF solutions as well.  My understanding of the technologies leads me to believe that HiMax started with the right approach, but MVIS investors should note that the company has both competition and interest emerging for its ToF-based solution.  I do think that one or both solutions will eventually become a big market, but I'm still not willing to buy HIMX above $8.

For those who were not able to load up in the past, I also note that BGCP goes ex-dividend tomorrow and is below the $12.83 minimum fair value that I've cited.  I still think CVA and CTL are even better medium-term values at current prices, but I wouldn't be at all surprised to see another post-dividend rally in BGCP.  Speaking of CenturyLink, it's taking to reselling security services for third-parties to its hosting clients, via an agreement with King & Union's Avalon.  CTL is one stock that is not dropping today.  The open interest that would experience max-pain at current pricing just below $22 next Friday has fallen to about 28M shares.  I continue to think that shares will begin appreciating some time after that. 

On the other end of the spectrum, those who took advantage of the FIT lows and are not afraid of short-term gains might consider looking for exit points while shares are near or above my $6 threshold and pundits are echoing what I've been saying for months.  I don't believe in trying to time the market, but I do believe in taking (partial?) profits based on valuation and note that Xiaomi took the top spot in wearables.  For long term investors, I see that as immaterial and continue to look forward to more detail on a smart-watch with the next FitBit report in November.  On the macro side, though, September still looks like the next possible pivot point to me.

While we're at it, MagnaChip filed an 8-K this morning documenting a work interruption and some related damage at its fabrication facility in Cheongju, South Korea.  This was caused by an accident involving a crane operated by a city contractor that impacted high voltage lines.  The total impact to third quarter revenue could be up to $3M.  I estimate that the impact to quarterly EPS should be less than a penny, and could eventually be recovered by insurance.  That makes this a non-event in my eyes, but I figured I'd include it for the sake of completeness.