Investing guru David Nierenberg (Trades, Portfolio) of D3 Family of Funds pared his stake in Electro Scientific Industries Inc. (ESIO, Financial) by 29.3% on Sept. 7.
Nierenberg is the founder of both the D3 Family of Funds and Nierenberg Investment Management. The firm focuses on a concentrated portfolio of micro-cap stocks with market capitalizations below $1.5 billion, which allows them better access to upper-level management. The firm prefers a “friendly persuasion” approach as opposed to an activist approach when in discussions with management.
Nierenberg sold 812,420 shares for the average price of $5.88 per share. He now holds 1,960,660 shares.
Electro Scientific develops and supplies photonic and laser systems for microelectronics manufacturers. The company was founded in 1944 and is headquartered in Portland, Oregon.
The company has a market cap of $178.7 million with an enterprise value of $111.7 million. It has a forward price-earnings (P/E) ratio of 11.1, a price-book (P/B) ratio of 1.02 and a price-sales (P/S) ratio of 0.9.
GuruFocus ranked the company’s financial strength 7 of 10. Its high Piotroski F-Score of 7 and Altman Z-Score of 3.34 indicate the company is financially healthy. The Beneish M-Score of -3.2 suggests the company is not a manipulator of its financial records. Electro Scientific has no debt.
GuruFocus ranked the company’s profitability and growth 4 of 10. It has an operating margin of -3.2% and a net margin of -3.18%. Its return on equity (ROE) or -3.5% ranks below 74% of other companies in the global semiconductor industry. Its return on assets (ROA) of -2.7% and return on capital (ROC) of -6.6% rank below 73% of other companies in the industry.
Nierenberg is the largest shareholder in Electro Scientific among the gurus with 6.2% of outstanding shares. Other gurus with positions in the company are Chuck Royce (Trades, Portfolio), Jim Simons (Trades, Portfolio) and John Rogers (Trades, Portfolio).
The DCF Calculator gives the stock a fair value of $-2.08; it was trading at $5.6 on Monday.
Disclosure: I do not own stock in any companies mentioned in the article.
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