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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: James Clarke who wrote (5158)	10/19/1998 12:03:00 AM
From: Michael Burry	Respond to of 78816

The Deswell thread here has been accused of being a cheerleader squad, but it really is the highest quality analysis on SI, IMO. There is little not to like about Deswell at prices anywhere below $15, but the thread tries hard to find them. I'd just refer you there. Paul and Ron and now some other good contributors from here have found their ways to the Deswell thread, and it makes it that much better. I just talk about it a lot because to me it's the most incredulous thing I've ever seen that Deswell hit the $6's. I went on temporary margin to back up the truck to it, and now I've sold 4 stocks to stay off margin yet keep the Deswell shares. But the story really should be over at the Deswell thread. James, you'd be a valued asset there. Mike

To: James Clarke who wrote (5158)	10/19/1998 10:26:00 AM
From: kolo55	Read Replies (1) \| Respond to of 78816

What has killed Deswell price? That's easy. One of their largest customers(23%), Mita declared bankruptcy reorganization for their Japanese unit. Just check out the latest Deswell press releases to see the confusion this has caused. The ex-CEO, Mr. Mita himself, is charged for illegal payouts from Mita. Some of the stock was held by Japanese, who couldn't put up with the front page headlines in Japan, and dumped their stock. Since the stock is very lightly traded, it got crushed. But the two Mita units that Deswell sells to are solidly profitable. Kyocera, the huge Japanese electronics component producer, is taking over Mita (2nd largest copier seller in the USA). As part of the transition, Mita is reducing inventory levels this quarter, which are expected to be replenished after the takeover is completed. So Deswell stock is now trading about book of 8.30 or so, and has 3.50 a share cash, and will earn at least $2.00 this year (down from last year). The company has said they will buy back up to 500,000 shares (if it trades around book) in the latest press release. Over the last five years this company has grown almost 50% per year, although the company expects that the growth from here may be somewhat less. And the dividend is expected to be at least 8-9% of the current stock price, and is about 35% of earnings. Deswell(DSWLF) is the unusual case of a foreign micro-cap growth stock ($50M market cap) trading like a value stock would trade. Paul