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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Cary Salsberg who wrote (11442)	9/4/2003 1:32:59 PM
From: C_Johnson	Respond to of 95622

Hi Cary, It makes me happy to hear that you remember one of my winners! <g> While the majority of our picks are in the capital equipment space, we have invested in FPD equipment makers, TAP subcontractors, IDMs, fabless chip companies, foundries and a small number of specialized end market plays. Do we pick the best in each space? I hope so. Having said this, the stocks in the sector tend to move in unison and sometimes it pays just to lower your IQ and allocate a percentage of assets to a segment. When I say segment I mean something like ATE, Automation or Subsystems. Of course, I try to weight the allocation to the best plays but I have to acknowledge that some stocks just attract more investor interest than others. For example, in the subsystem arena, AEIS always seems to move the most during upcycles even though MKSI, in my view, does a better job managing their business. In an area like ATE, when business is great CMOS and LTXX tend to really move though TER is probably the most entrenched play. There is no set free-cash flow model in place with my selection process. I am not sure I can use one effectively. You may have some success with a model like this. I should also mention that we have segregated a portion of our assets to an area called the Nursery. This allocation -equaling about 10 percent of the Model assets - is comprised of very, very speculative plays. Obviously there is a danger in doing this because some investors tend to throw more money at the speculative issues and ignore warnings that these are high risk propositions. I try to be very clear about our strategy here. Sometimes they work, sometimes they don't. These stocks should only be taken in small doses. Hope this answers your questions. Carl