Guest Post -- Anaren (ANEN)
ed note: I haven't done this before, but Bill Melver, a reader of this site, visited Anaren's annual meeting and urged me to look at the company -- I haven't gotten around to it, but asked him to write up his thoughts and he did so. With his permission, I'm printing his writeup on Anaren here for all to see. I think Bill's diligence in visiting the company and actually seeing their operations is a great example for other investors, large or small. TJ.
By Bill Melver – Akron, OH
Among the many things I look at when investing, I am starting to pay more attention to the operating philosophies of the top executives of companies, especially smaller companies on the verge of a breakout. In this vein, it’s also important to me that such philosophies are in line with the current trends in corporate America. Of course all the other fundamentals, like earnings growth history, strong balance sheet, forward looking investments and engaged in a growth industry are a given, before studying the management philosophies.
This summer, I was introduced to a company that “appeared” to meet all these criteria and I bought 100 shares. The company is Anaren. (NAS: ANEN). In late August, I received a copy of their annual report and announcement of their annual shareholders meeting, to be held on November2, 2006 in Syracuse, NY. I was impressed with what I read in that annual report and decided to attend the meeting. Living in Akron, OH, Syracuse is only a 7 hour drive. I called to inquire about special hotel rate, the venue of the meeting and was pleased to be connected to Ann Savage, the Corporate Secretary and Executive Assistant to Carl Gerst, one of the founders of the company and currently serving as Vice Chairman and Chief Technology Officer. I asked Ms. Savage that I was driving in from Akron and if I were to arrive early enough, the day before, could I have a tour of the facility, a request graciously granted.
Upon arriving at Anaren Headquarters about 3 PM on November 1, I was greeted by Mr. Gerst himself, who conducted a very comprehensive tour of the business. The minute I met Carl, I was impressed with his non-assuming demeanor and especially the badge he wore, hanging from a lanyard around his neck. The badge had his name and one simple word below – “Employee”. It didn’t say Corporate Officer or Vice Chairman or Founder – just “Employee”. To me this single thing spoke volumes about this man, who founded this company, has been leading it through thick and thin, and is now finally poised to break out.
Here are some fundamentals that are impressive to me.
If one were to apply the 25% positive earnings surprise, based on past five quarters, that would place the stock price around $28. The futures market is already pegging the stock to be at $24.50 by April. (April 22 ½ calls are bringing a $2.10 premium!) I personally sold five of these contracts last week on shares that have a cost in the $20’s.
This is exactly the kind of company discussed in Patricia Aburdene’s recent book, Megatrends 2010. The period of growth driven by greed is behind us. Success of the future belong to companies that emphasize ethical values and fairness, creating an enriching workplace for their employees.
Bill Melver
Akron, OH
Full Disclosure: Bill and his family own shares of ANEN, and this writeup represents his views alone. Travis Johnson does not own shares and has not independently confirmed the facts in this post. Bill can be reached at williammelver@sbcglobal.net and is happy to correspond with other investors interested in ANEN.
By Bill Melver – Akron, OH
Among the many things I look at when investing, I am starting to pay more attention to the operating philosophies of the top executives of companies, especially smaller companies on the verge of a breakout. In this vein, it’s also important to me that such philosophies are in line with the current trends in corporate America. Of course all the other fundamentals, like earnings growth history, strong balance sheet, forward looking investments and engaged in a growth industry are a given, before studying the management philosophies.
This summer, I was introduced to a company that “appeared” to meet all these criteria and I bought 100 shares. The company is Anaren. (NAS: ANEN). In late August, I received a copy of their annual report and announcement of their annual shareholders meeting, to be held on November2, 2006 in Syracuse, NY. I was impressed with what I read in that annual report and decided to attend the meeting. Living in Akron, OH, Syracuse is only a 7 hour drive. I called to inquire about special hotel rate, the venue of the meeting and was pleased to be connected to Ann Savage, the Corporate Secretary and Executive Assistant to Carl Gerst, one of the founders of the company and currently serving as Vice Chairman and Chief Technology Officer. I asked Ms. Savage that I was driving in from Akron and if I were to arrive early enough, the day before, could I have a tour of the facility, a request graciously granted.
Upon arriving at Anaren Headquarters about 3 PM on November 1, I was greeted by Mr. Gerst himself, who conducted a very comprehensive tour of the business. The minute I met Carl, I was impressed with his non-assuming demeanor and especially the badge he wore, hanging from a lanyard around his neck. The badge had his name and one simple word below – “Employee”. It didn’t say Corporate Officer or Vice Chairman or Founder – just “Employee”. To me this single thing spoke volumes about this man, who founded this company, has been leading it through thick and thin, and is now finally poised to break out.
Here are some fundamentals that are impressive to me.
- The Company is in a very high growth sector of the technology industry and yet, is currently virtually debt free.
- Over the past three years, the Company has been investing heavily into automating their manufacturing processes to achieve higher productivity and quality control, all the while, buying back its shares. The float is down from 21.8 million shares, three years ago to 17.7, reported in their annual report.
- The company has beat analyst projections for net income over the last five quarters and is poised to repeat this performance, as it continues to penetrate the consumer wireless market, a new market segment for them in 2005 that grew by 100% in its second year.
- They truly value their employees and have created a work environment that sends a value message to their work force. This impressive initiative is mentioned in their annual report.
- This philosophy of fairness and sound business principals is pervasive from the very top. Mr. Gerst’s annual compensation is only $250,000 and has not changed over the past three years.
- The company just broke the $100 million revenue threshold while improving their net income ratio from 9% of revenue in FY 2004 to 13% in 2005.
If one were to apply the 25% positive earnings surprise, based on past five quarters, that would place the stock price around $28. The futures market is already pegging the stock to be at $24.50 by April. (April 22 ½ calls are bringing a $2.10 premium!) I personally sold five of these contracts last week on shares that have a cost in the $20’s.
This is exactly the kind of company discussed in Patricia Aburdene’s recent book, Megatrends 2010. The period of growth driven by greed is behind us. Success of the future belong to companies that emphasize ethical values and fairness, creating an enriching workplace for their employees.
Bill Melver
Akron, OH
Full Disclosure: Bill and his family own shares of ANEN, and this writeup represents his views alone. Travis Johnson does not own shares and has not independently confirmed the facts in this post. Bill can be reached at williammelver@sbcglobal.net and is happy to correspond with other investors interested in ANEN.
This article posted by One Guy @ 11/13/2006 01:10:00 PM 0 comments
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