NPTN Buyout – An MVIS-ish Legacy Ends

Yep. It’s another stock post. Something happened that I actually have to do something about. My style of investing is called Long Term Buy and Hold (LTBH). Circa 2000 I bought a stock, that spun off a stock, that was acquired, renamed, bought out, sold out, so I bought some of their competitor, which just announced today that they are also being bought out. Buy, wait two decades, then sell, which will lead to another buy – and hopefully not having to wait twenty years, again. NeoPhotonics is being bought out, which means I’ll sell, shop, then buy something else. It is time for me to get a bit busier with my portfolio.

For those whose ears perk up or whose stomach twists into knots at the mention of the company, this involves MicroVision (MVIS). Yes, that one. It also involves the University of Washington, inventions that were decades ahead of their times, and a lot of patience. 

Those who want the fuller story can read my post from May 2012, UW MVIS LMRA GGOX GIG. I’ll summarize and use lots of acronyms and symbols. A prof at UW came up with ideas that helped create MVIS. MVIS held onto the display technology – which will be ready any day, week, month, year, decade – for the last twenty-so years. Eventually MVIS needed money so they spun off Lumera (LMRA), which worked on bioarray chips for rapid analysis of medical samples, solid state steerable antennas for telecommunications and collision avoidance systems for cars, a few other things I can’t recall, and solid state electro-optical switches that could operate at very-high speeds with very few moving parts. 

It seems that those bio chips could’ve been handy during our recent pandemic. Steerable antenna for telecom? I think telecom has grown at least somewhat since then. (understatement on purpose) Collision avoidance for cars? Yep, that became a thing. But the acquiring company get rid of all of them in favor of the electro-optical switches. It fed well into their product line. Eventually the company became profitable. Just as I hoped the stock would reflect that, the company sold out to a private firm. I sold and received a small premium, but not enough to provide a significant return on investment. 

Rats. I couldn’t own stock in the tech, so I bought stock in the industry by buying stock in their competitor: NeoPhotonics. 

Here’s a minor irony. Basically I had stock in Lumera (LMRA) and have stock being bought out by Lumentum (LITE). That’s a long way to go to come back around from Lumera to Lumentum. 

This buyout, too, will reflect a premium of ~45%; not bad, but not a champagne-popping ROI, and certainly not the kind of premium so many hope for companies like MicroVision (MVIS). 

Right ideas, a little too early, but just right for someone who could buy the entire company. 

Another aspect of my investing strategy is to buy small companies, hold them until they become begin to succeed, at which time the stock tends to appreciate as the investment community switches from pessimism to optimism, then sell at a premium. It is a risky strategy, but the rewards can significant. IF the company succeeds. I’ve experienced it enough times that I continue to use the strategy. For details of personal successes and failures, see my book “Dream. Invest. Live.” For years of irony read this blog which is much bigger than the book.

So, LITE is buying NPTN so I plan to sell my NPTN then buy something else. Some sell immediately. Some buy into the acquirer. I hold for a little while longer in case a second buyer appears, driving up the price. 

What will follow for the next few weeks will be my research into what to buy next. I plan to blog about it as it goes, because that process is at the core of what I describe in the book. The somewhat short version is to find:

  • small companies (<$2B market cap, because many analysts overlook small companies)
  • developing innovative, positive technologies that have the potential to positively disrupt their industry, or make a new one (which plays to my strength of understanding new tech)
  • soon to be profitable (I tend to get in too early, if you hadn’t noticed)

Then I get picky. 

The list of thousands of stocks will winnow down to one. My NPTN position wasn’t large enough to spread around. Diversification is a great enabler, but, well, a “perfect storm of bad luck” damaged that. The process can take weeks depending on whether I find any candidates and whether the rest of my life has sufficient time available. Gotta keep working, eh?

The recent experience of MicroVision (MVIS) (meme opportunity: has anyone made a ‘micro’ version of the character ‘Vision’ from the MCU?) was fascinating to watch as people recently finding the company scrambled for adequate comprehensive descriptions of the company. As I investigate companies I might write up some descriptions as appropriate. There might even be an entertaining market for that as I stumble to understand possibilities. YouTube lives!

The strategies I follow are old. They work more from the viability of the company rather than the daily variations in the stock. The strategies may be having difficulty with day trading, programmed trading, hedging, and hyper-speed access to the trading environment. I’ll stick with the basics because of things like the anecdotes I described in Trust Your Self (currently my most popular post of the last twelve months and the third most popular post overall).

Stay tuned for one of the more significant and current examples of my approach to my personal finances. I wonder what I will find. I wonder.

About Tom Trimbath

real estate broker / consultant / entrepreneur / writer / photographer / speaker / aerospace engineer / semi-semi-retired More info at: https://trimbathcreative.net/about/ and at my amazon author page: http://www.amazon.com/-/e/B0035XVXAA
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