John Buckingham (Trades, Portfolio), CEO of Al Frank Asset Management and editor of the Prudent Speculator newsletter, added 30,037 shares of Marvell Technology Group Ltd. (MRVL, Financial) in the fourth quarter of 2015.
Marvell Technology Group was founded in 1995. The company is a fabless semiconductor provider of high-performance analog, mixed-signal, digital signal processing and embedded microprocessor integrated circuits. The company's products include devices for data storage, enterprise-class ethernet data switching, Ethernet PHY, mobile handsets and other consumer electronics.
Marvell Technology provides HDD storage to companies such as Seagate technology, Toshiba Corporation and Western Digital Corporation. Marvell Technology Group also serves the consumer electronics market for the convergence of voice, video and data applications. The company also provides complete smartphone platform solutions, including communications and applications processors, wireless, power management and other platform components for customers such as Research in Motion Limited, Huawei, Motorola, Samsung, Yulong Computer, and Telecommunication Scientific Co. Ltd.
The company's wireless products also are used on a standalone basis in consumer electronics devices, including tablets, wireless access routers and gaming devices, by companies such as Cisco Systems, Microsoft Corporation and Sony Corporation.
On Feb. 23, Marvell announced that its new cloud-based VectorBoost technology to complement its G.now platforms, offering Elastic Capacity Provisioning, increased peak capacity and cirtualization of the Broadband access network. The new technology is currently available to Marvell's global customers.
In 2014, KT Corporation, the number one wireline telco in Korea with over 20 million telephone subscribers, chose Marvell’s G.now technology to enhance broadband access in multi-dwelling unit buildings over KT’s existing copper infrastructure.
There are a few inherent risk factors associated with Marvell Technology:
- A significant portion of the company’s business in dependent on the HDD industry, which is highly cyclical, experiences rapid technological change, is subject to industry consolidation and is facing increased competition from alternative technologies.
- The company receives a significant amount of revenues from a limited number of customers. Net revenues from the company’s two largest clients represented 34% and 30% of the company’s net revenues came from the three months ended May 2, 2015 and May 3, 2014 according to Marvell Technology’s most recent 10-Q filing.
- The company just settled a lawsuit with Carnegie Mellon University for patent infringement on two hard disk drive patents. The company must now pay out at least $278.4 million dollars in damages to Carnegie Mellon University. This is a severe warning sign because this shows inefficiency within the company's research and development.
There are also a few good signs for Marvell Technology that make it a profitable investment:
- The company's book value has grown at an average rate of 8% annually over the previous 10 years.
- The company is trading below its intrinsic value.
- The company has recently developed and successfully released the new VectorBoost technology, which improves the throughput of G.now lines.
- KT Corporation, the number one wireline telco in Korea has with over 20 million subscribers chose to use Marvell G.now technology to enhance broadband access in multi-dwelling unit buildings over KT’s existing copper infrastructure.
Guru John Buckingham (Trades, Portfolio) has nearly 30 years of investment experience. He started out working in the mailroom at Al Frank Asset Management in 1987 and worked his way up to director of research in 1989. Buckingham was then promoted to chief portfolio manager. Buckingham has since worked his way to becoming the CEO of Al Frank Asset Management, and he is also the editor of the Prudent Investment Speculator newsletter.
Al Frank Asset Management owns 152 stocks with a total value of $646 million.
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