Interesting Post from "Yahoo" board :rolo,
Obviously, you are free to do as you wish. But I would hate to think you were selling because Ken was blowing smoke up your skirt. It is helpful to keep in mind that until the August options expire, Ken has an agenda to keep the ALSC stock price down.
In the evaluation of Alliance, most analysts have given very little value to the Alliance Ventures. Generally, they value them at cash invested. All this changes as soon as one of them gets bought out. Then suddenly you have shares of BRCM, VTSS or PMCS that add significantly to the appraised value of Alliance shares.
Regardless of whether you think the Reddy's 15% management interest is a ripoff or not, I think it is hard to make a case that their investments haven't added significantly to the visible value of ALSC shares.
Do you know of any other semiconductor stocks you can buy at book value? Did you listen to the conference call, in which the backlog of orders to be filled virtually guarantees that ALSC will exceed the 20% sequential revenue growth guidance they gave? Are you aware that emerging DRAM shortages should dramatically increase ALSC's revenues and earnings? Are you up for selling before the IPO of the UMC ADR's (which could easily increase the value of its UMC shares by 10-40% or as new chip designs come into production which should increase revenues and decrease costs? Have you considered how strong Alliance's position is having additional production capacity available through its agreements with UMC and Chartered Semi without the fixed costs inherent in owning fabs? Can you imagine what Alliance might be able to do with its enormous horde of cash and liquid investments? Have you considered how much safer they make your investment in Alliance by providing enormous buffering against a downturn in the semi cycle?
You may think the Reddy's are cheesy in the way they handle the venture investments, but I'd think twice before you pass up the opportunity to make a lot of money by holding your ALSC shares. Regardless of the noises Ken makes, the terms of the venture investment agreements are small potatoes. Compared with the enormous and growing asset value and the rapidly growing earnings, Wall Street simply doesn't care if the Reddy's get 15% of the take on the deals. Ken knows that. You don't see him selling his shares (he's actually trying to avoid selling shares by having them called away). Ken has been involved in this stock longer than either of us, and he's been bitching about how terrible the Reddy's are for a long, long time. |
