Interestingly, Bert published a deep dive on this company the same day an MF paid subscription recommended it:
http://seekingalpha.com/article/4031963-impinj-can-chip-comp…
It looks pretty interesting. Does anyone on this board already follow/own it?
Another good article from Bert Hochfeld.
Thanks az5speedy,
Frank
Does anyone on this board already follow/own Impinj?
I had seen Bert’s deep dive earlier in the day, and then after the close I got the MF rec. I decided that the stars must be aligned and took a quite small position in the aftermarket yesterday (the day of both recommendations). But I kept it really small because I hesitate to buy ANY chip maker, who will almost inevitably be commoditized (Yes, yes, I know they provide solutions too, and databases and whatever, but still…)… Besides which, it’s almost tripled in price since the IPO… besides which again, the CEO sold a lot of his stock in a secondary at $27. But inspite of all that, I couldn’t resist both recommendations coming out on the same day.
By “really small,” I mean about a 1% position. (Since I have 13 other positions at present, the average size of the other positions would divide out to roughly 8%, so this is “really small”).
Saul
Well yeah, but Bert didn’t really recommend it. The way I read the article he seemed intrigued but not convinced. His disclaimer said he has no position in PI.
I put it on my watch list but didn’t buy it. I don’t really see a moat. Chips become commodities, s/w and cloud is not difficult to replicate.
Well yeah, but Bert didn’t really recommend it. The way I read the article he seemed intrigued but not convinced. His disclaimer said he has no position in PI.
His disclaimer also said he might initiate a position in the next 72 hours…he does not say that for every stock he analyzes.
Which brings up something I’ve been trying to find: a list of Bert’s current holdings. I can’t seem to find one. I am very curious to learn which stocks Bert actually owns.
I got to this point in Bert’s article;
The success that the shares have enjoyed subsequent to the very modestly sized IPO allowed the company to launch a secondary offering which was completed at the end of November. The company wound up selling a bit over 4 million shares at a price of $27 share. The prospectus suggested that some of the proceeds of the offering might be used for tuck-in acquisitions and that seems a likely strategy at this point. Of the shares that were sold, the company offered 1.5 million, VCs offered 2.5 million and the CEO offered 800,000 out of his total ownership of 1.17 million.
Then I looked at the chart and see it’s about $40.
And knowing IPO’s are generally overpriced…
Think I’ll go with the CEO and…
JT
Then I looked at the chart and see it’s about $40.
And knowing IPO’s are generally overpriced…
Hi JT,
On the contrary, IPO’s for small companies are almost ALWAYS massively underpriced! Massively! Why? Here’s a discussion from the Knowledgebase:
Little companies that are doing IPO’s or secondary distributions get ripped off by the underwriter (investment bank). It’s not that investment banks are evil. You might as well call a wolf evil because he eats rabbits. It’s the nature of things.
Here’s why: Sure the investment bank gets a fee for sponsoring the IPO and arranging to sell all the shares. But it still has to get rid of all those shares, which normally it sells to its own clients. Now if it’s a big popular company like FB that is having the IPO, everyone wants shares, and all the investment banks compete for the prestige of taking part in the IPO. That gives the company having the IPO a lot of negotiating power.
However, if it’s a little company that no one has ever heard of that is having the IPO, how is the investment bank going get rid of millions of shares? The answer is to pressure the little company to sell its shares as cheaply as possible. Well below what they are worth. What matters to the investment bank is how its own clients who get the shares will do, not how the company who is having the IPO will do. And it’s not only worried about its clients! The underwriter will take some of the shares itself, for its own book, if the price is low enough.
The IPO company is a one-time customer. However, the favorite clients will hopefully be there indefinitely and the investment bank wants to keep them happy so that they will take IPO stock in the future too. That insures that they, the investment bank, can keep getting those IPO fees, etc. In addition, if the favored customers can make instant money on the IPO, that gives them a good reason to keep their banking and investing relationships at the investment bank.
So that’s why you’ll hear of stocks going up 30%, 40% or more on the day of the IPO. The underwriter (think Goldman Sachs, Morgan Stanley, etc.), succeeded in getting a great deal for its clients by pricing the stock very low. Remember that the underwriter’s customers don’t know anything about the company. They just know they are getting a stock cheap and that they will be able to sell it at a profit almost immediately. Pretty good deal for them, isn’t it?
Sometimes the underwriter is able to sweeten it further and package a couple of shares with a warrant to buy at some price in the future. That makes it an even better deal for the underwriter’s clients.
Saul
For Knowledgebase for this board,
please go to Post #17774, 17775 and 17776.
We had to post it in three parts this time.
A link to the Knowledgebase is also at the top of the Announcements column
on the right side of every page on this board
By the way, that doesn’t mean that I’m convinced that PI is a good investment. And I’m also curious about the CEO selling so many shares (except he’s been locked into a non-publically traded company for 16 years, so maybe he wanted to get a little cash for all his years of work).
Saul
And I’m also curious about the CEO selling so many shares
Well he should know the market for his products as well as anyone, eh. 
JT
The IPO company is a one-time customer
Sort of, but not really. The IPO company is ONE customer and if other pre-IPO companies see the udnerwriter “ripping off” the company, then they will take their business elsewhere. The underwriter needs to find a price that can make both parties happy, and even the best may find that difficult at times.
Also, having a neighbor with family money at Goldman Sachs, I know that clients are often forced to take mediocre IPOs in order to be eligible for the great ones, so both sides have to give a little bit.