Hi WL, No problem in posting here. This has always been a good natured and informative group at the GNSS thread.
I started my investment in GNSS in October of 1999 with sort of a "gorilla/king" thought. It has been part of my portfolio ever since. I'd been to a trade show and seen a few flat screen monitors being used as public displays in the booths. Then in Feb. of 2000 at yet another trade show I'd seen a significant increase in their usage - nearly 50%.
I started my investment at $19.44 for 1000 shares. My holding increased gradually to 3300 shares by March of 2001 when the price dropped to $9.375. The position decreased through a series of partial sales to just 700 shares with the last sale being at $66.21 in early December of '01. After that I didn't do anything but hang on to the remaining shares as I'd taken my original investment out of GNSS several times over by then. So, even though I had hopes of G&K performance over time, I "planted and harvested" all along the way.
I reactivated the account in January of this year by selling off an additional 100 shares at $18.34 and then replaced those shares at $12.85 in early February. My intent was to stay with GNSS and trade a range in the mid teens with a portion of my holding.
PXLW
This merger thing caught me off guard. I looked over Value Line and found that Genesis is listed in their "Small/Mid Cap" portion while Pixelworks is in their regular edition. PXLW didn't exactly have the best timing for its IPO in that it came out right after the market peak in 2000 (May) at $10/share. It was bid up as high as $51+ that first year but has been trading with lower highs ever since. Insiders own a significant portion of the outstanding shares (22+%). BETA is a healthy 1.75. Stock Price Stability is "5" out of a potential "100" making it "unstable." Corporate Capitalization is 100% from Equity sales with no long term debt. For my usual M.O. all this is good news so far.
With revenues and book value growth (next 3-5 years) estimated to be 23% and 13% respectively, it would appear that things should be quite rosy. However, it has a relatively short track record and that has been during rather trying times. So, it's hard to guess whether Value Line is making a stab in the dark or has a good feel for this. They comment that PXLW is loading up their plate with devices for the "advanced television" segment. This is expected to be a very fast growing area overall and their business should prosper from that growth. It's also a lot of eggs in one basket.
Institutional ownership has shown nearly equal buying and selling during the first three quarters of 2002. In the third quarter, there were more individual buyers than sellers, but total institutional ownership dropped slightly.
Bottom line is they were expecting the individual company to possibly trade between $11 and $19 in the next three to five years.
GNSS
With Genesis, we see several things in common with PXLW. GNSS has a lofty BETA of 1.85. Stock Price Stability is also 5 out of a possible 100. Both these lead to anticipating pretty good trading ranges for both stocks individually, and if combined, collectively. GNSS is a bit older, going public in 1998. It's had fast sales and book value growth while earnings have been rather erratic. There's a very small amount of long term debt but it's essentially 100% capitalized by common stock. There was a lot of institutional buying going on in the first three quarters of 2002, however it was off set by heavy selling in the second and third quarters. As a result, institutional ownership is down a bit from the first qtr. of 2002.
Unfortunately, in Value Line's expanded edition they don't give any 3-5 year projections for us to ponder. I couldn't find insider ownership numbers either in this section. So, a direct comparison is beyond my capabilities.
My concern in the past has been stated in several articles about GNSS and PXLW. Both companies seem to make pretty nice product and have nice leads in their respective fields. However, what would happen if one of the larger semiconductor companies would decide to want this market for themselves? Is there enough "I.P." here to keep these guys cooking or would they have to go off in some new direction to stay in business? Unfortunately there's not enough meat in a Value Line report to be able to discern this sort of thing.
So, is the "new" company going to be a power house in the field of Visual Display device drivers? Well, they already are relative to the newer display devices. With CRTs fading into history along with their high energy consumption, space use and extra HVAC needs, it appears that flat panel, projection and other newer designs will be the rage. HDTV, still in its infancy is coming over the horizon quite quickly. Will Phillips, Zenith, Sony, etc. not want their own piece of this business?
G&K Infant Status? Maybe. For me, for now, I'm willing to see how it plays out. I have shares that are well paid for and think yet a new trade range will develop. Please remember that even though I trade around a core holding, I only sell out of a position completely when I feel something fundamental has changed to make it no longer attractive on a 3-5 year basis. I know the G&K folks are pretty much buy&hold in their attitudes, so this is where I differ. I put a risk cap on my investments and rarely let the total at risk increase. The only time I do is when the prices are cheap and then I let the risk envelope expand.
So, we may be seeking the same thing even if our management styles are different.
Best regards, Tom |
