Illumina Inc

Industry Analysis (Limited Buyers,  highly correlated to economic conditions, capital intensive):

1) Buyer: Limited -> High


3)Rivalry: Concentrated and Limited

4) Barrier: High

5) Substitution: Limited

6) Complements: High

Genotyping and related technology will be a disruptive technology in the medical arena. However, it may not be a profitable industry,  i.e. airline industry, without better understanding the profit models.

NVE Corporation

NVEC is looking fairly attractive from the top line growth perspective. Spintronic technology is going to be able leapfrog current technology and create new and disruptive markets.

Ideally we’d like to invest in Great company at fair price. Unfortunately, NVEC is currently priced high and offers little margin of safety.

Looking at the balance sheet: The market CAP is at $258M. Out of the book value of $75M, on the surface it’s look like a fair value of book price multiple of less than 4x. However, $55m of the book value is in short-term bonds. Stripping that out of the MC and BV, you are really paying $200M for a book of $20M, which seem pretty steep.

On the revenue side, you paying about 8x on the $30M top line.

To sum up I consider a NVEC a great growth company but at a premium cost.

Q2FY11 Conference Call