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Technology Stocks : International Rectifier (IRF) -- Ignore unavailable to you. Want to Upgrade?

To: marvin litman who wrote (1033)	6/17/1998 9:52:00 AM
From: DanZ	Read Replies (1) \| Respond to of 1712

Marvin, A lot of people are worried about Asia and this is reflected to some extent in the valuations of semiconductor stocks. Nobody knows how bad this will get or how much lower semiconductor stocks in general will go, or whether we have seen the lows for that matter. I take solace in knowing that IRF's book value is 7 3/4 because I absolutely can't find any reason why it would trade below that given the following: 1. Their asset base is not declining. 2. They have not been taking on a lot of debt or blowing assets purchased with debt. 3. IRF is still making money and their retained earnings are rising. Equity = Assets - Liabilities When you put this all together, I don't expect the book value of IRF to decline and I think this is the absolute floor for the stock. Stocks do sometimes trade below book value, but only under different economic conditions (serious inflation and rising interest rates) or if there is a threat of bankruptcy or a decline in the book value. I don't see any of that in the future. Asia or no Asia, I think the floor for IRF is only $1 lower and the stock has tremendous upside potential once the cycle turns. I am bullish on the SOX (Semiconductor Index) but I'm basing my opinion on technical analysis and the historic length of the business cycle for semiconductor companies. I believe that semiconductor stocks will turn 6 to 9 months before their earnings show a low point. In times like these, I place more importance on fundamental anaylsis than technical analysis because I think the market is being driven by irrational fear and margin calls. I may be totally off and lose my shirt on IRF but my reasons for holding (and even buying more) are at least well thought out. When people sell out of fear or because they are forced to sell because of a margin call, they are not making rational decisions and the market has a way of correcting those inefficiencies over the long haul. By the way, I sold some out of the money calls on about 1/3 of my position yesterday as a partial hedge. Good luck to everybody. Dan