During the second quarter, the investor Jim Simons (Trades, Portfolio) heavily increased his stake in Xilinx Inc. (XLNX) by 445.65%, becoming the fourth largest shareholder of the company with 726,800 shares. Simons began to buy shares of the company in Q1 2010, but during the previous three quarters he cut his stake by more than 80% at the average price of $42.65. The following quarter, he added to his stake at the price of $45.06. He is now having an easy gain of about 3%.
The company
Xilinx is the world’s leading provider of All Programmable FPGAs, SoCs, MPSoCs and 3D ICs, enabling the next generation of smarter, connected, and differentiated systems and networks. With over 3,500 patents and 60 industry firsts, is known for its historic achievements including the introduction of the first FPGA and the inception of the fabless model.
Last quarter results
The quarter was marked by strong profitability. Gross margin increased to a record 71.9%, and operating margin to 33.1%, both significantly higher than the expectations.
Diluted earnings per share and net income both were up 10% quarter over quarter while operating income was up by 13%, and net revenues was down by 3% quarter over quarter. Even so, for first fiscal quarter 2016, sales were down 3% from the prior quarter and down 10% from the same quarter of the prior fiscal year. Still, Xilinx's newest 20nm Ultrascaleâ„¢ product family surpassed $10 million in sales.
Collaborations
Xilinx collaborated with Taiwan Semiconductor Manufacturing Company, Limited (TSM) on the 7nm process and 3D IC technology in which TSMC has been the foundation of the success at 28nm, 20nm, and 16nm. The collaboration will provide Xilinx a multi-node scaling advantage and build on its outstanding product, execution, and market success at 28nm, 20nm, and 16nm nodes.
Buybacks
In the last quarter, the company repurchased $100 million of stock and paid $80 million in dividends, representing nearly 100% of operating cash flow generated during the quarter. They also returned over $450 million to shareholders in the form of repurchases and dividends, significantly more than they generated in operating cash flow.
Outlook
They are expecting total sales for the December quarter to be flat to up 4%, and gross margin is expected to be 1% lower in the range of 69% to 70%. This sequential decrease in gross margin percent is driven by product mix as 28-nanometer revenue grows and older product revenue declines.
Financial situation
The company has a financial strength rated 6 out of 10. It has a total cash to ÂÂdebt ratio of 2.12 that is ranked higher than 53% of the 835 companies in the Global Semiconductors industry, which has an average ratio of 1.78. Cash to debt and interest coverage ratio are hitting the worst performance in the company’s history.
During the last two years, the cash to debt ratio has been affected by the short term debts, which jumped to be 37% of total debt of the company.
| Debts (in million) | Â | Â | |
| Year | Long Term | Short Term | Â |
| 2010 | 355 | 0 | Â |
| 2011 | 891 | 0 | Â |
| 2012 | 907 | 0 | Â |
| 2013 | 923 | 565 | Â |
| 2014 | 994 | 576 | Â |
| Â | Â | Â | Â |
| Â | Â | Â | Â |
| Short Term % of total debts | 37% | ||
Profitability
Both operating and net margins are strong. They are both ranked higher than 95% of other companies in the same industry, and they are respectively 31.42% and 26.90%. While operating margin is hitting the highest level in the recent company’s history, the same doesn’t happen for net margin that is far from the best level of 63.9%.
Returns are positive as well with ROE at 23.18% ROA of 12.55%.
Net profit margin has a five-year growth rate of 36% with an average growth rate year-over-year of 10%.
| Net-Profit Margin | Â | |
| year | % | Â |
| 2010 | 19,50% | Â |
| 2011 | 27,09% | Â |
| 2012 | 23,66% | Â |
| 2013 | 22,48% | Â |
| 2014 | 26,46% | Â |
| Â | Â | Â |
| Â | Â | Â |
| 5-Year growth rate | 36% | |
Share price & EPS
The stock is trading at about $40. Year to date, the price has dropped by 8% but has risen by 59% over the last five years with a CAGR of 6%. During the last 12 months, it has dropped by 7% and is now trading ÂÂ-17.77% from its 52 week high and +10.57% from its 52 week low, with a P/E ratio of 17.50 and a forward P/E ratio of 18.98.
Earnings per share (EPS) has grown by 82%, with an average growth rate of 13% every year and a CAGR of 17%.
EPS has grown at a faster rate than the price (86% versus 36%) but the current P/E ratio of 17.50.
| Year | EPS | Â |
| 2010 | 1.3 | Â |
| 2011 | 2.43 | Â |
| 2012 | 2.01 | Â |
| 2013 | 1.86 | Â |
| 2014 | 2.37 | Â |
| Â | Â | Â |
| Â | Â | Â |
| Five-year growth rate | 82% | |
| Five-year compound rate | 13% | |
| Five-year average growth rate | 17% | |
Dividend Yield
The company pays its shareholders an annual yield of 2.99% with a dividend payout ratio of 50%. The yield has a five-year growth rate of 14.60% that is steady even over one, three and 10 years.
| Dividend Yield, growth rate | Â | Â | |
| 1 Year | 3 Year | 5 Year | 10 Year |
| 13.50% | 15.10% | 14.60% | 17.40% |
Gurus and Hedge Funds
The main hedge fund holding shares of the company is First Eagle Investment (Trades, Portfolio) with 3.97% of outstanding shares that is 1.08% of its total assets. The second one is Charles Brandes (Trades, Portfolio) with 0.93% of outstanding shares, followed by Jeremy Grantham (Trades, Portfolio) with 0.50%.
During the last quarter, John Hussman (Trades, Portfolio) started a new position with the company while Charles Brandes (Trades, Portfolio), Jeremy Grantham (Trades, Portfolio) and Joel Greenblatt (Trades, Portfolio) reduced their stakes. First Eagle Investment (Trades, Portfolio) and Jim Simons (Trades, Portfolio) increased their stakes
