Friday, September 04, 2015

Integrated Silicon Solution

I spent yesterday and today building a position in Integrated Silicon Solutions, Inc. (Ticker: ISSI) at an average price of $21.76 (~ 16% position). This company is being taken private by Uphill (a consortium of Chinese PE firms) for $23.00 per share in cash. The remaining two hurdles for this deal to close are to obtain regulatory approval from (1) CFIUS and (2) Taiwan. The company is guiding for a late Q3 / early Q4 close. I am currently modeling a close by October 30th, which translates to an annualized gain of ~ 37% (net gain of 5.71%).

On the surface, when you see: semiconductor company based in US + Chinese ownership + CFIUS review… Warning bells start ringing and that’s why I think there is such a wide spread. If you dig a little deeper, the company does minimal biz with the US government and has agreed to any CFIUS mitigation measures. The company has also been very transparent in updating the Street on the progress of the regulatory review process.

It’ll be really nice if this deal closes at the end of this month… so we’ll see…

22 Comments:

At September 08, 2015, Anonymous Anonymous said...

interesting view on ISSI

chinese want to buy, and if something go wrong with regulators, there should be still possibility to close may be with Cypress at 22.60 per share or less ... ok not sure 100% but, do you see a sage cushion in the case something go wrong with China and they block them? ok it's hard, but just thinking.

Going to buy directly shares? or doing something with options?

 
At September 08, 2015, Blogger worldbroker said...

This comment has been removed by the author.

 
At September 08, 2015, Anonymous Anonymous said...

CY market cap is suffering from market downtrend, and debt position not the best.
So how solid is the chinese buyer? is it a big group?

 
At September 08, 2015, Anonymous Anonymous said...

And about ALTERA?

http://nypost.com/2015/09/04/feds-clear-intels-16b-acquisition-of-altera/

is HSR ok now? it's a done deal? we can exepect a success here and start a position?

this should be a great news and a great play. I would go heavy here.

Let me know, thanks

 
At September 08, 2015, Anonymous Anonymous said...

ALTR is going up +3%

 
At September 08, 2015, Blogger Money Turtle said...

I'm currently playing ISSI via the common stock. I took a look at the options and there was nothing attractive. I believe the Chinese buyers are very committed based on what you saw during the bidding war. Three of the investors have expertise in the semiconductor space.

I believe Altera is a safe play now after receiving the HSR approval.

 
At September 08, 2015, Anonymous Anonymous said...

so will you go in ALTR?? is still 6% yeld!!!

 
At September 08, 2015, Anonymous Anonymous said...

no second request it's a surprice

if US regulator says yes there is very hard chance to get trouble with EU/China regulators, they could ask some deal, but not to block, so today is very good opportunity before market open to find a good low where to go in. May be today is the bottom... and we will never be back here. What you think?

 
At September 08, 2015, Anonymous Anonymous said...

and now when do you see the close after the HSR ok? 2 months max?

 
At September 08, 2015, Anonymous Anonymous said...

I'm in 50.60 average, let's hope, today we should see at least 5% spread so at least 51.50 area. To buy pre-open should have been a bargain. People still sleeping. Let's see.

 
At September 08, 2015, Blogger Money Turtle said...

I don't know if ALTR requires MOFCOM approval. That's usually the one that drags things out, but getting HRS approval should be pretty much clear sailing.

 
At September 08, 2015, Anonymous Anonymous said...

in the articles I have read EU/China so yes for mofcom, but usually it require 2.5 months and so I think max 1.5/2 months or so now. Shareolders vote is 6 october, could this deal close by end of november? With HSR Ok we should expecte at least that the deal could close before year end, but may be before december also.

 
At September 08, 2015, Anonymous Anonymous said...

however
you was long months ago and closed with losses ALTR risk arb
I want to see if now with good news you will take position again
the yeld is very attractive and with so high China volatility
vote in october should have the OK because everybody happy to get 54$
after have seen 44$ in China meltdown.

Let us know if you plan to enter in this position again, soon.
thanks

 
At September 08, 2015, Blogger Money Turtle said...

Back in July, I actually exited ALTR with a net gain of 1.80%. In any case, I'm back in today at $50.39 (~10% position). HSR was my big concern back then and now that is out of the way...

 
At September 08, 2015, Anonymous Anonymous said...

ok very good, thank you

and when do you estimate will close the merger? how many weeks or months?

 
At September 08, 2015, Anonymous Anonymous said...

ok ALTR close 50:20, not so good, but I can image that a lot of people suffered huge losses and the gap up was a liberation for them and there was so pressure on sale. Perhaps even PCP was under pressure. Seem that to each intraday record of indexes those stocks went down, a switch of liquidity to riskier assets.
So I hope and expect that as soon as this pressure will finish till end of week we should see ALTR rebound. Because 7.5% is really high yeld, I want to see it at list at 5% above 51 and near 51.35/51.50 area, that has sense, but now, still seem like market is scared and is drammatically underestimating a big opportunity. In SA an article says that still neeed japan, Corea, China regulators but in other article is written also EU. Much more scaring a google-motorola deal... here HSR is done, come on, let's have courage! good luck to Money Turtle.

 
At September 08, 2015, Blogger Money Turtle said...

The Altera / Intel deal still requires approval from the EU, China, Japan, South Korea, Taiwan and Israel. The companies have guided 6 to 9 months to close the deal, which puts us to a time frame of November through February. I’m modeling for an end of December closing…

 
At September 08, 2015, Anonymous Anonymous said...

Most important that we close the deal, if december or february..... I would sign to have 100% probability than 99.50% or 99.999% :))
Let's hope, more time, more trading, I decided to go with cash so I will make trading actively.

So I'm in PCP and ALTR now, hope to don't suffer so much, at this point I should have job and trading at least till end november/december as you said, and we can relax to wait some other good deal, but, with market falling as I think, something like ALTR/PCP will be hard to find, with good liquidity.

let's see. thank you very much for your support.

 
At September 10, 2015, Anonymous Anonymous said...

EU due 14 october
I estimate max 2.5 months for MOFCOM
there is a good chance so we end before end of november first weeks of december
:) let's hope..

 
At September 10, 2015, Blogger Money Turtle said...

Thanks for the update on the EU filing...

 
At September 11, 2015, Anonymous Anonymous said...

ANY thoughts on $ZSPH and $SLH?

 
At September 11, 2015, Blogger Money Turtle said...

I'm just playing ZSPH with short term trading. I have no edge on this one. It's just a coin flip.

 

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