Hi I2,
In the worst of the 2000 and on, they paid their 24 cents.
Rates were so low it was better than a bank - much like now.
During that horrific and boring time period, I learned that to sell far out $10.00 puts, tripled the dividend and collectively provided an excellent low risk return. It was a no brainer and it was very low risk.
During that time I accumulated an undue concentration of Cohu stock. All at even now very low prices, plus a lot of cash.
Since then, I've retired and learned about dividend growth portfolios.
It's not that - I'm negative on Cohu. BUT, I have rules. Over the last 10 years a stock must pay a dividend. If I'm not getting paid - I'm not waiting.
I still do like the sector and 5G is all but upon us.
I like Cohu's management because they are very conservative.
With the acquisition of Xcerra, they took on 350 million of debt.
I bought my first shares of Cohu in 1978. Since then they've always had a large cash hodre.
They've done very well over the years - some of them tough years.
Cohu Bought Xcerra in October of 2018 . I've seen how they work with acquisitions, impaired intangible write offs ,as they fold everything into their Malaysian manufacturing facility and the Philipines dedicated kit manufacturing of consumables. These all result in severance payments and relocation expenses. It's all part of becoming efficient and working your brick and mortar very efficiently.
Jeffrey Jones is very good as a CFO. I had stock in his previous employer SBSE whcih was bought out by GE. He is topshelf!
Louis is no doubt smart, but I think he lacks "The hammer". Brks manufacturers in Malaysia, they not only beat their numbers but grew the revenue in semi's for an 11% percent gain. Why did they not have "supply channel problems"? Their product is certainly more complex and leading edge. They got it done!
I'm not calling for Louis' head, but he needs to get authority and command of the challenges.
Lastly the two of them together are all but scarey on a webcast. They project fear and lack of confidence when business does not go their way. They need to address the shortfalls and commit to get them personally handled or maybe they are not lead type management needed
. There needs to be a hammer that does not accept less than success. They are mid -aged and not seasoned - it shows in their webcasts to me.
Add to that, that the board wants to live the good life, get paid very well, much better than that of a board associated with a profitless company, should be receiving.
The independent Director needs to get some cajones and"do what is needed". Admittedly his cut in executive compensation is the kind of statement that is necessary, but then he cut the nuts of the stockholders all at the same time. This shows either delayed action or a lack of obligation to the stockholders. I' offended that they come coincidentally as in "A bit late perhaps?"
You end up with a Board of retired past leaders, who are tired (retired) and want the country club to continue. There is no one there saying this is BULLSHIT, I'm taking control and getting things back to making money.
What looms on them (I suspect), is the debt is not getting paid down and as they expand the size of the board to ten from eight, they take a cut in a big pay plan (while overall expense remains the same), while penalizing the owners of the company (stockholders) with a 100% suspension of the dividend. Oh I get that, that's fair and balanced!?
They may not have the right guy with "hands on" leadership skills, there is no one ready to take control , while they all want their porridge at "just right temperature".
The "DEBT LOAD" is what is scaring them into forsaking the stockholders.!
This is something that never would have been considered in the days of growth and 2 for 1 splits (Chuck Schwann's) leadership.
Since his leadership, there have been no dividend increases, large BOD fees, and huge ESOP expenditures, all buried under "Non Gaap" adjustments .
Excuse me, I know of better companies out there that get it done and grow in tough times.
I'm hurt they've allowed themselves to decline into this lack of performance.
It's time for me to move on to dynamic superior companies - THAT PAY A DIVIDEND! and GROW EVEN IN TOUGH TIMES
I've adjusted my portfolio, and made back my dividend income , without Cohu's piddly dividend.
It was the lowest percent dividend I had. I held onto it for old time sakes. Totally my fault !
All that being said, Cohu has been very good to me, but the stockholder friendliness has not only diminished ,it in my opinion is gone now.
They have shown a viewpoint that "It is we who make this company, and it is we who should absorb all of the income". The awareness that the stockholders are the owners, is either completely absent or greatly diminished.
Don't get me wrong. I will keep a tolken of my lowest cost stock and watch the company. I hope they get their stuff together and become profitable on a GAAP basis!
Bottom line, I don't need to own the poor performing stock to make make three times the dividend by selling puts.
As long as their track record of serial underperforming and weak to horrible webcasts continues - the best game in town for this stock and where the real money is, can be accomplished by selling $5.00, $7.50, $10.00 and $12.50 puts. With this level of performance, there is no need to have my hard earned money invested in the stock ownership of this now indebted weak performer, especially when they show no respect/ commitment to the stockholders!
To be honest, I feel like a guy who just got ditched by his girlfriend.
Really let down for having a higher regard for them, than they had for me.
I think I sort of sulked after the webcast.
Woke up the next day and said time to go where I know their is better management - after today' s decline into the 14's - REALLY GLAD IT TOOK ME LESS THAN 12 hour to do what I should have done back in August 2018.
I dumped it 500 shares at a a time non stop all last week!
I hope these guys will get it together, but it will take longer than what I'd hoped it should or could.
Xcerra was a bigger company, with more cash and higher margins. It is apparent the fragmented hodge podge of the many different components were not as dynamic as originally thought. That and the market has been difficult.
It's fair to say Cohu knew that, as they took Microtest from number 1 to number 2 before the sale of Xcerra has nixed by the CIFIUS board. That gave Cohu an unusual proposition. They are used to slowly making a better test handler and gaining market share not buying bigger acquisitions than they were themselves. It's a bigger problem to resolve and it is them taking time.
I believe they need to shed "NON CORE" assets (I doubt there are many bidders in this trade tariff/Covid 19 environment). Donahue is sharp enough to do that - it is now a tough seller's market.
That being said, sell of the lower margins drags of managements time - pay off the debt and go on about your core competencies.
That formula always makes the best growth and profits.
End of rant - I'm walking out the door here.
Bob |
