Legendary guru Chuck Royce (Trades, Portfolio) reduced his holdings in Cabot Microelectronics Corp. (CCMP, Financial) in the fourth quarter.
Cabot Microelectronics is the world’s leading supplier of chemical mechanical planarization slurries and a growing CMP pad supplier to the semiconductor industry. The company’s products are used to level and smooth as well as remove excess material from the multiple layers deposited upon silicon wafers in the production of semiconductor devices.
The company's primary strategy is to strengthen and expand its operations. The company has recently expanded by 40% by entering the CMP polishing pad market. It has also strengthened its position on copper CMP slurry through the acquisition of Epoch Material Co. Ltd. Cabot Microelectronics has the goal to further expand its operations in the optics and prime wafer polishing sectors of its business.
Cabot Microelectronics has a market cap of $958.45 million, an enterprise value of $768.31 million, a P/B ratio of 2.17 and a quick ratio of 6.99.
According to GuruFocus, Cabot Microelectronics has an 8/10 financial strength rating and a par 5/10 profitability and growth rating. The company's operating margin percentage is strong with a 16.60 rating higher than 83% of the 828 companies in the global semiconductor industry.
Cabot Microelectronics' revenue growth percentage has been in decline over the previous three years, which is a severe warning sign for investors. Royce is the master of reading financial statements, and this could be the reason why he decided to slash more than 25% of his position in the company.
Royce is known as one of the fathers of small-cap investing. He graduated from Brown University with a bachelor’s degree and a master of business administration from Columbia University. Royce began his career as the director of research at Scheinman, Hochstin, Trotta and as a security analyst at Blair & Co.
In 1972, Royce founded the Royce Pennsylvania Mutual Fund. By the mid-1970s, Royce found himself among a small handful of managers willing to invest primarily in lesser-known small and medium-sized companies. Royce then began to learn how to look at companies from a consensus viewpoint. He worked hard and became a master at reviewing companies with small caps and attractive balance sheets that were able to generate free cash flow and long-term earnings records.
Cabot Microelectronics is also traded in Germany.
Below is a Peter Lynch chart for Cabot Microelectronics.
Cheers to your investment success
Disclaimer: The author does not currently own any shares of this holding.
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