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Posts from the ‘ChipMos (IMOS)’ Category

Week 150: Stepping Back a little

Portfolio Performance


See the end of the post for the current make up of my portfolio and the last four weeks of trades.

Recent Developments

For the last number of months I have been increasingly uncomfortable about being fully invested.  Throughout the amazing rally that we’ve had since the beginning of 2012 I have been haunted by the idea that the rally is a liquidity induced euphoria .  In particular, I am given humility by this chart. Read more


Week 146: Some thoughts on agility

Portfolio Performance


See the end of the post for the current make up of my portfolio and the last four weeks of trades.

Recent Developments

Four weeks ago I wrote:

I think an important pillar of my strategy to take advantage of the concentration that I can have.  I don’t have anyone pressuring me to be diversified or questioning my risk level or anyone to answer to if something goes wrong.  So I don’t hesitate to have a large percentage of my portfolio tied to the names I think will perform the best.

With that said, the names that I am currently of the heaviest weight are, of course, Pacific Ethanol, which remains my largest position by far

Today Pacific Ethanol represents a 2% position for me. Read more

Lessons from the Debt Ceiling

In my post from earlier today I mentioned that I had made some portfolio changes over the past fews weeks and would be sharing them in a series of short posts.   In this one I want to talk about what I did and then undid because of the debt ceiling.

In my last monthly update, posted on the 12th, I wrote about how I was reducing exposure to stocks in response to the uncertainty about the debt ceiling.

In my accounts I go into the weekend with more than 25% cash (I’m a little under that in the practice account I show here, at around 23% including my remaining Novus position, as I didn’t quite keep up with the selling I was doing elsewhere). I should perhaps be at an even higher level, but many of the stocks I own are so obscure and out of the mainstream that I feel some confidence that they will be spared some of the carnage that will occur if the debt ceiling is not raised out of indifference alone. The stocks I trimmed the most were the one’s that have proven most volatile to market swings.

By Tuesday of the next week, October 15th, I had moved to a little over 35% cash in my accounts.  I received a few comments that this was a silly move, that the US government wouldn’t be stupid enough to let its interest payments lapse.  They turned out to be right.  Nevertheless, I stand by my decision; I work hard to grow my portfolio and putting that hard work at risk on the assumption that the people in positions of power will do the sensible thing is, in my mind, an unnecessary risk.  Remember Dick Fuld? Read more

Week 111 Portfolio Update: When Things Aren’t Working…

Portfolio Performance


See the end of the post for the current make up of my portfolio and the last four weeks of trades.



In a previous post about Walker & Dunlop I described the consequence of being on vacation while the company announced poor results, which was that I was not able to take advantage of a clear selling situation.  The same was the case for Dex Media.

In the past I used the term “good enough investing” to describe what I’m trying to do with my portfolio.  I work a full time job, have a life and need a break now and then, and all that means I just can’t be on top of everything.  I try my best but I have found it necessary to employ techniques to mitigate this.  In particular, I sell stocks when things aren’t working out.

While I’ve had my share of winners over the past month and a half (AIQ, NVS, NCT, NRF, IQNT to name a few), I’ve also had my share of losers (NKO, EXE, VTNC, and the above mentioned duo) with the result being that my portfolio has done not much of anything. While I remain hopeful that both Niko Resources and Extendicare eventually pan out, the fact is that thus far they haven’t. Read more

Week 95: Setting the table (hopefully)

Portfolio Performance


See the end of the post for a full portfolio breakdown.


Since my last update I exited Radian Group, Arkansas Best and MBIA.  The sales reflect a desire to redeploy cash in other opportunities as well as some lingering concerns about each company.

With Arkansas Best, its my uncertainty about the outcome of union negotiations.  The negotiations were extended this week for a second time.  An escalation to a strike does not seem out of the question.  If a strike occurs the stock price may or may not get hit; while a positive resolution could be quite good for the stock in the long-run (see my original post about how Arkansas Best would benefit from a contract structured in a similar manner to the one that YRC Worldwide operates with) the uncertainty may drive panic selling.  I’ve decided to wait this one out for a few weeks and see how it plays out. Read more

One Poor Decision with ChipMos, Hopefully not Another

I took a ~3% position in ChipMOS Technologies (IMOS) last week.  It hasn’t quite worked out the way that I had hoped.  I’ve had a tiny starter position in the stock for a while, but I up-sized that position significantly when I added at $16 last week.  It closed at a little under $15 on Friday.  As I wrote in an email to a friend:

I overreacted with IMOS.  Totally misread the TW emerging market exchange listing.  Thought the closing price of 8150 was a game-changer event.  Not so much.

Perhaps not as eloquent as I would like but it gets the point across.  I’ll elaborate below.

ChipMOS provides assembly and testing for memory and logic/mixed signal semi-conductors.  The following diagram illustrates where ChipMOS fits into the semi-conductor manufacturing process.


In 2012, the company derived 29% of revenue from testing of memory semi-conductors, 33% of revenue from assembly of memory semi-conductors, 23% from testing and assembly of LCD semi-conductors, and 16% from bumping (gold plating) of semi-conductors.

The company generated about $200 million in EBITDA last year and has an Enterprise Value of about $430 million (their cash position is about the same as their debt) which makes the company cheap on an EV/EBITDA basis.  While ChipMOS doesn’t look quite as good on an earnings basis (they earned 94c per share on a GAAP basis last year) that number will improve going forward as their depreciation expense declines significantly (depreciation was $157 million in 2012 but should be nil by the second half of 2013).

A key point with ChipMOS is that the stock trades at a significant discount to its competitors on the Taiwanese exchange.  ChipBond, which is a close competitor, trades at a 50% premium on a earnings basis, and, according to one brokerage report,  a 200% premium on other industry metrics.

The primary reason for the premium seems to be nothing more than the Taiwanese exchange listing.   The catalyst with ChipMOS is therefore a listing later this year for its Taiwanese subsidiary, of which ChipMOS owns 83%.


The first step in that process took place last week when the ChipMOS subsidiary was listed on the Taiwanese emerging markets exchange, which is a junior exchange.  Stock quotes can be accessed on Bloomberg with the trading number 8150.

The stock opened with a bang.  The original pricing on 8150 was $15tw.  On the first day of trading the shares opened at $20tw and closed at $40tw.  Since that time they have settled back to $33tw.

The $40tw price implies a value of $33USD for ChipMos shares on the NASDAQ. The current price of $33tw translates into a price of ~$27USD for ChipMos.

Presumably this gap will narrow.  One of the reasons it has not is because the float on the subsidiary is quite small (ChipMOS did not release a large amount of shares for trading because of the low offer price.  It was testing the waters), the volumes are tiny, which limits any arbitrage between the two companies, and its still not trading on the main Taiwanese exchange.

I jumped the gun when I bought into the run-up after the first day of trading of the Taiwanese sub.   At the time I thought that the price of the sub would be enough to validate a higher price for the NASDAQ listed equity.  That wasn’t the case.  My spidey-senses seem to be a little off lately; I have been having a tendency of wrongly predicting the market reaction, both to the high and low side, of late.  But that’s another story.

Nevertheless, the story remains intact, even if it will not be realized as quickly as I had hoped.  I am going to hold my shares with the hope that the re-valuation occurs in the weeks and months ahead, as we come closer to a listing on the main Taiwanese exchange.