SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Technology Stocks : Deswell Industries (DSWL)
DSWL 3.410+3.6%3:58 PM EST
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Michael Burry who wrote (1200)2/13/1999 1:59:00 PM
From: jmt  Read Replies (2) of 1418
 
I would like to own a business with this sort of cash-generating power outright at recent prices.

Deswells free cash flow has been outstanding. That plus conservative management and historical growth have made this a great business to own.

You want to look at the average earnings power and growth over the long-term

I agree with the principle, but then the rest gets subjective. My presentation of annualized earning was simplistic. But to clarify, one cannot use historical growth and earning to project into the future when business fundamentals change.

First, from a macro economic standpoint, neither of us can predict with any certainty the cycle for china or SE Asia. But do not expect a recovery to previous levels overnight. Japan is a good example of this.

Second, to project future earnings is to use the information available, with current conditions weighted heavily. If pessimistic, an analyst could do the opposite of what you suggest and annualize the earnings on a declining rather than flat trend. Loss of market share is difficult to reverse unless the fundamental reasons for that erosion are identified. I am waiting to hear more from Deswell concerning this.

Third, the ROA and ROE for Deswell is below market. One must peel back the onion to recognize these ratio's are being driven by the huge denominators, both impacted by the cash levels. As I have stated before, what growth is available to a money market fund proxy?

Until Deswell better defines the direction and investment for the future, IMHO future growth is difficult to quantify.

jmt
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News