I have a few companies that I’ve been meaning to update my thoughts on of late, so that’s going to be the majority of today’s Friday File — there’s real news from a few, an active and vociferous debate between shorts and longs on one, and plenty of room for opinions to change as Summer gradually turns to Fall here on Gumshoe mountain.
First, we’re past due to take another look at CVD Equipment (CVV). IF you don’t know the company, this is a firm that makes chemical vapor deposition equipment that’s used by labs and semiconductor fabs, among other places, to make semiconductors and nano-scale materials. They are focused on the lower end of the market, making custom machines for labs and small start-ups and trying to get their foot in the door for larger orders when materials are ready to go into production. They’ve been talked up over the years as a graphene play because they have a small graphene materials business, selling sheets of that nanomaterial, and because they sell CVD machines to the labs that are researching the next wave of graphene advances, but most of their revenue still comes in for work that’s more directly related to semiconductors research and development.
The story of the past 18 months or so is that the company was a growth darling, with increasing orders and high demand for its equipment … and to meet what they thought would continue to be increasing demand, they decided to consolidate their two divisions into one larger building to give them room to grow. Moving is always hard, but it struck me that they were unusually bad movers — they started to slow down on their sales push more than a year ago because the move meant they couldn’t fulfill orders in a timely fashion, and then they took a while to sell both of their existing facilities, and seemingly forever to get the new building set up and operating, so it was almost exactly a year between when they actively slowed down their order flow and when the new facility really opened at near full capacity. They didn’t stop operating during that time, but they were like a horse walking with hobbles on, not moving very fast or decisively.
I resolved to be patient — they had a decent ramp up in sales growth before the move, they ...