Has anyone read Reuters analysis of INVN? I ask this because, while not highly regarded, a report of this kind is the only analysis I can think of that would lead someone to short a stock as promising as Invensense. As much as I rack my brain, I cannot explain the percentage of short interest in this stock. Yes, they missed earnings this past quarter. Yes, the insider selling has been constant and predictable. Yes, the company had been weighed down with the STM litigation. But the legal obstacles, for the time being anyway, are over and the future has never looked brighter, given INVN's growing phone and tablet presence in the world, most notably China, and their likely dominant presence in wearables. So, once again, I ask for the short argument on this stock. Can anyone out there give me a a well thought through defense of the short position on this stock? Here to learn, not to debate. Thank you.
I don't think INVN resolved their differences with STM, I believe the market did. The market wanted to get a company that could deliver technology benefits most quickly to impact near term products. STM had the right intellectual property but not the ability to rapidly translate technology into consumer benefits. Even though there was a $15 million price tag on the resolution, I believe INVN gets recognition that dwarfs that value. I think the market forced a resolution because of what large consumer goods suppliers wanted, not what lawyers of each side wanted. However, we won't know that until that difference in ability to deliver is realized.
So the question becomes: As the leader of this company, how long will it take me to get this stock moving much higher? Well if the shorts have their way, a long time. If competition has its way, a long time. What's a CEO to do with a company that has the promise to be an industry leader, is about to go big time with new orders/revenue growth, but is small vs competitors?
Sell it to a major chip company that has a close fit - Qualcom, Intel, STM - or Google, a serial acquirer of leading edge assets, or Samsung where you have market penetration by INVN of 70%.
And you know how to do this. You sold the last firm you were CEO of - Raza.
Sentiment: Strong Buy
Although the lawsuit with STM is resolved they still are coming off a 12 million loss for the prior quarter. They also have the excess inventory and 3 customers make up 56% of total sales, The other slight negative is they took on 150 million of convertible debt with warrants attached for the Analog Device acquisition. The shorts are looking at volatility as their friend. Invensense is a growth story but it will take time. .
whyg, the short presence was there before last earnings. The 150 mil in debt can be paid off tomorrow with cash reserves. And, yes, the three customers comprising a little more than half their business is not preferable but not a major concern right now. Not debating you, just stating facts.
i think people short it just because it is so volatile. Any kind of due diligence and research will tell you the future is bright for INVN. However, if you are shorting to make a quick profit on the ups and downs that INVN has, I can understand.
Seigel, The thing I find with some my stocks that are shorted is that there is a question of doubt, whether it be earnings, suits, or announced wins, shorts can prey on bad news or no news. Second, being a visible consumer product is different than being inside a consumable product. In INVN's case it's even worse since they don't announce wins and they don't publicize when the new product goes to market. So the only thing shorts have to fear is earnings, and that only happens once a quarter.
On the other hand if their is significant news, like an Apple win, shorts get nuked.
I've used another of my stocks, that is a big short, before, GTAT. Look at it's history over the last year. Shorted like crazy then on Nov 4th they announced the Apple deal - up 26% in one day and it hasn't stopped rising since. Shorts are clawing to get out but still 30m shares short and every one significantly under water. GTAT is a company that makes products that go into a consumer product; they are making the new Apple sapphire glass for the I6S and wearables. They also make the solar furnaces that Chinese solar makers use to make solar wafers. Not end products, therefore susceptible to lack of knowledge and fear.
Sentiment: Strong Buy
Thanks for your response, Jimmy. Hopefully INVN will be another GTAT for all of us. I see only good things happening for this company and I have trouble fathoming why such a large percentage of the float (one third) does not. So, being heavily invested in this stock, it makes me ask myself if there is something I am missing; do the shorts know something I don't. Having you and others around to see me through these "fleeting moments of doubt" is an immeasurable help and relief and I thank you and everyone else (you know who you are) for you timely and invaluable research and feedback on matters pertaining to this stock. On a separate note, If you aren't already, watch "True Detective" on HBO if you get it. It's on Sunday nights (tonight) and with Matthew McConaughy and Woody Harrelson in the starring roles it's some of the most compelling television I've ever seen.