Advanced Power Technology (APTI)

Company

"APT designs, manufactures, and markets worldwide, high power, high voltage, high performance power semiconductors for both switching and RF applications. Our products are powering the next generation high power systems for servers, computers, high capacity mass storage products, cellular base stations for telecommunications, and industrial applications such as advanced medical imaging systems, lasers, semiconductor process equipment, and arc welders, as well as military and aerospace power systems. With the RF related acquisitions made in 2002, APT has positioned itself as a leading supplier in bipolar RF power transistors for avionics, radar and non-cellular communications applications. More recently, we completed two acquisitions in the wide band gap technology area. We believe that wide band gap, and in particular silicon carbide (SiC), will be a key profitable growth driver for APT. The Company’s technologies and products are specifically focused at meeting the world’s increasing demand for more sophisticated forms of electrical power, more power overall, and more efficient utilization of electricity to conserve this valuable resource. APT customers are worldwide and include several of the top Fortune 500 OEM companies along with many well known industry leaders and innovators in the power conversion and motion control markets. APT takes pride in providing custom, value-added solutions frequently developed in close partnership with our customers to meet their specific power application requirements thereby arming them with a distinct competitive advantage." (company website)

Buy

24-Oct-05. APTI broke above the $8 level late last month with big price jumps on high volume. When they reported on 20-Oct, earnings exceeded expectations, and the company issued optimistic guidance for the next quarter.

• Price momentum (PPO) — tapered off since the big price jump
• Trend (ADX) — still reasonably strong, and buying pressure (+DI) is pointed up again after touching up with the selling pressure (-DI) line
• Money flow (CMF) — neutral
• Relative strength (RSI) — strong
• Volume — modest, but stable

Based on technical analysis, MarketEdge has APTI as a "strong buy" with a "strong upward trend."

Sell

4-Nov-05. Some times you lose, and some times you win. Yessss! Yesterday, APTI shot up on news that it had agreed to be acquired by Microsemi Corp (MSCC) for terms that valued APTI at $12.20/share as of Wednesday's close.

My first impulse was to sell and smile all the way to the bank. Then I got all cerebral and worked the equations to compare the value of my current holding and the value after the deal. Finding that the deal was favorable by about $150, I decided to hold. Then I got all realistic and looked at the chart for MSCC (see sidebar) and realized that it is in a downtrend after a new 52-week high at the end of September, and that means that the post-deal value is likely to decline. So, this morning I sold, having once more swung back to believing that the bird in the hand...