Chris Karlin presented his in-depth investment thesis on Versum Materials (NYSE: VSM) at Wide-Moat Investing Summit 2017.
Versum provides innovative solutions to the global semiconductor industry involving the development, manufacturing, transportation, and handling of specialty materials. The business has operated for 30+ years. It was spun out of Air Products & Chemicals (APD) on October 1, 2016. While Versum has performed well since the spinoff, Chris believes there is further upside. There is reasonable visibility into the business, it has low capital intensity, strong cash flow generation and benefits from macro tailwinds relating to semiconductor growth. The stock recently traded at reasonable multiples in light of its quality and growth characteristics: EV/EBITDA of 11.6x and P/E of 16.8x. With base upside of 22-35% over the next two years and reasonable downside of 11%, Versum offers an asymmetric reward-to-risk ratio of more than 2.6 to 1, or 4.6 to 1 when incorporating the upside case.
About the instructor:
Christopher Karlin has been in the investment business since 1991. Prior to founding Aquitania Capital Management in 2012, Christopher held positions as a Research Analyst and Portfolio Manager at First Pacific Advisors, Kestrel Investment Management and Fairview Capital Investment Management. Christopher interned with Farallon Capital Management while pursuing his MBA. He began his career with Wells Fargo Nikko Investment Advisors which later became a part of Blackrock. Christopher received his BBA from the University of Wisconsin in 1990 his MBA from Yale University in 1998 and has held the CFA designation since 1994.
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