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AWE is somewhat isolated on the LSE as the only semiconductor player of midcap size and above. Its peers are mostly on NASDAQ where the AI fever is in full swing - the likes of Marvell, Broadcom, Rambus etc., are all rated as considerably overpriced when using DCF models and their analysts are only giving target prices in line with where they are already at. On the Taiwanese exchange its peers are also overpriced on DCF.
Credo, also on NASDAQ are very similar to AWE in many respects but by comparison they are generating marginally less revenue with more than twice the market capital, while their price already slightly exceeds the analysts targets. The DCF model however indicates it is nearly 40% undervalued.
Analysts target price for AWE is nearly double its current price and DCF modelling currently yields a fair value £2.20. If they continue to hit or exceed their revenue expectations and continue to sustain or even improve on their EBITDA margin then a price correction will be an inevitability even it doesn't come before then.
In theory AWE should be a good pick & shovel play for the gold rush that is the data / intelligence explosion.
So far it has not benefited. I see Nvidia has reached the $Trillion market cap threshold.
Morning Barcap.
"I tend to invest in people (Directors) as much as I in do business models and I believe my short is in good hands with the quality of directors in AWE."
Investing in 'people' is a wise approach to good investing. So would you care to expand on what attributes you think the directors of Alphawave have that leads you to the conclusion they will destroy any value this company has?
Ollycoto21
Thanks for your advice but I'm happy to hold my short and not "double down" unlike many of the traders on here would do ( Or should they be called "gamblers").
I know there are some on here who are genuine long term bulls and I respect them for that.
I tend to invest in people (Directors) as much as I in do business models and I believe my short is in good hands with the quality of directors in AWE.
Only time will tell but I expect the directors to destroy any value this company has over the long term.
Cheers
Barcap
Nicely worded blue 🧐
"All the acquisitions, many of which are bad and non profitable." ... Gosh, how many acquisitions do you think they 've done? How would you know they are bad and unprofitable?
"One of the acquisitions was heavily China centric now blocked from trading in China (that was good timing)."
Please don't make stuff up.
"Revenue is vanity and the products and area AWE are into is not state of the art also."
So, the industry first, 112G Ethernet and PCIe 6.0 SerDes IP on TSMC's 3nm process node isn't state of the art?
Which company has TSMC, the largest silicon foundry in the world, announced as this year's winner of the OIP (Open Innovation Platform) Partner of the year for high speed SerDes IP for the third consecutive year? It wouldn't happen to be Alphawave Semi would it? Oh but would you have it, so it is! How come that is so? It wouldn't be due to the fact they are leaders in state-of-the-art SerDes connectivity would it? Yes sir that would be the reason!
As for revenue, this is up 100% on last year, with a significant contribution coming from one of their three acquisitions, which you apparently call bad and unprofitable. First quarter 2023 bookings reported in excess of $100 million. Not bad for a company with 'many' bad and non profitable acquisitions huh?
All the best and good luck.
Shorters paradise (should say).
All the acquisitions, many of which are bad and non profitable. Despite all the up talk in the final results facts are a net 1m loss. One of the acquisitions was heavily China centric now blocked from trading in China (that was good timing). Revenue is vanity and the products and area AWE are into is not state of the art also. I think it’s best watched and I wouldn’t be surprised this becomes a shortest paradise in the near future. (I followed in Sutarda and sold out at a loss due to the lack of honesty and transparency). Good luck to those still keeping the faith.
Thats a bull case from a trader's point of view lol.
If you're that certain about the future of the business long term then go ahead and double down next week.
Ollycoto21
Thanks for your interest.
I like to trade longer term and even though this blip today sees me 18p underwater, which a weaker person would panic and close the short, I'm happy to keep the position.
I won't reiterate my reasons as I've spouted them enough times but one swallow doesn't make a summer.
Private investors have been going knees deep yesterday and today to jump on the next perceived 10 timer.
Good luck to them.
Cheers
Barcap
Wow 130p now, flying this afti, unlucky barcap 🤪
Up 9% now and showing 123.3 to buy.
Burn baby burn :)
Barcap, would defo consider closing down that short at a small loss, unless you have balls of steel. You’ve been on the right side of every call so far, there’s gonna be one time when we actually go up.
To be fair i was expecting it to go right back down today, so raising another 1% or so ill take it ! be interesting to see how the sp moves once the american market opens fingers crossed a bit more of a push i have a 1.26 ave i need to get back to !
Hope the Nvidia provoked rise would not run out of steam so soon
Fair play Barcap, hope your short burns but fair play to post your position rather then claiming it afterwards. Hoping for £1.20 and a breakout on the back of Nvidia news, certainly alot of positivity in the sector currently. GL all
That last sentence was meant to read: AWE is also the most undervalued stock among its silicon IP peers.
Well done Barcap,
Stockopedia gives Alphawave Sucker Stock status with the following miserable scores out of 100; Stock Rank: 14 Quality: 25 Value: 34. It did however, until only very recently, have the maximum Growth ranking score of 100. For whatever peculiar reason this has now dropped to 97. It has an Earnings Manipulation Risk (M-Score) of High, a Health Trend (F-Score) of 2 out of 9 and therefore subsequently qualifies for two short selling screens (the Beineish M-Score and James Montier Unholy Trinity Screens).
Kuvari Partners increased their short position on 28th April by roughly 630,000 shares, and a further 630,000 shares on 23rd May for a total short position of 0.91% (6.4 million shares). They first crossed the 0.05% threshold with a 0.62% position back in November 2021 when it was around £1.80 and so is in healthy profit. It will be interesting to see when they eventually close them as a buyback of 6.4 million shares will take a bit of time without unduly affecting the price movement.
Bear in mind when going short based on short-selling screen selections for stocks that have already taken a beating like Alphawave who have only fairly recently listed with a large cash raise and invested the funds in acquisitions that are transformational for the business then those actions by default tend to trigger the negative financial indicators that makes them seem favourable for shorting.
The Financial Times Alphaville column (a fave among Pro shorters) did an article Friday 19th May, titled “Alphawave: omegawhoops” with subheading ‘Fabless, erroneous and semi detached.
Basically the article emphasizes all the negative changes between the prelims and audited results as well as highlighting the departure of the CFO. It does however finish off with a mildly positive broker note from JP Morgan:
“The new audited revenue is 11.4% ahead of what consensus was expecting when the results were due. The new audited Adj. EBITDA is 19.9% below what the consensus was expecting, with the audited margin of 25.3% below the expected 35.1% margin. The fact that the company had spent more was known at the last report; that the miss was much more is not positive, although the fact that the cash flow did not change in the audit is a positive. . . . [On the balance sheet] all the changes are non-cash so there is no change in the reported cash flow of the company, which we view as a key positive.”
Incidentally, the audited margin was in fact in line with what had been communicated at the Capital Markets Day presentation at 25%. The Q3 trading update had predicted amargin of 32 to 36% but this was before the Banias acquisition.
On a more positive note AWE qualifies for a R&D breakthrough screen selection based on quality factors related to how much a company is investing in its future development. SimplyWallSt give AWE a DCF fair value of £2.18 and a current average target price based on 3 analysts of £2.67. AWE is also the most underv
A lot of PIs buying so time to short aggressively IMHO
Yes Nvidia's revenue for data centres for the year was $15billion. Up 41% YOY.
And Automotive sector revenue almost $1 billion. Up 60% YOY.
Crucially these are the sectors that Alphawave's products supply to.
"Chief Executive Jensen Huang said accelerated computing and generative artificial intelligence is propelling two simultaneous transitions in the computer industry. "We are significantly increasing our supply to meet surging demand for them."
Incidentally, Alphawave Semi have recently introduced a new buzz marketing phrase in their communications: "Accelerating the Connected World". Accelerator chiplets form a key part of their product range.
On another note, if we break 120 I think I'll probably have to add. From a purely technical standpoint will indicate that his has legs. I have a full position already so would just be a trade tbh, hoping to ride a big move up and recover some of my losses.
Hi Blue Ruphus,
appreciate the response! What has everyone extremely excited was the guide for next quarter at nvidia, Expectations were for rev around 7b and they guided to over 11b. Not sure any company of this size has ever surprised to the upside so much. It's quite insane.
as you say I can't imagine this isn't good news for alphawave.
Olly,
I've not read the Nvidia report. Just saw the highlights a few minutes ago. First quarter revenue down 13% but data centre revenue up by 14%. Data centres being the main niche area for Alphawave as a specialist in connectivity especially high speed low power SerDes products.
Considering that organic growth (outside of China) for Alphawave was about 13% against a macroeconomic downtrend, I personally think Alphawave are very well. Remember that Alphawave also enjoyed highest ever quarterly bookings of $103 million, which by the way is absent of any Wisewave and Verisilicon bookings.
I'm holding back from adding for now as I want to see the dust settle on the debt ceiling fiasco.
Anyone that's more knowledgeable about the tech - is the nvidia report a good read-through for demand for alphawave's IP? Or the market just bidding up every high tech chip company rn?
Probably linked to the rise in Nvidia overnight.