Sunday, October 10, 2004

MSC Software gets an offer!

MSC Software (MNS) got an offer from a private equity firm, ValueAct Capital Partners. The offer, at $9/share, is around a 15% premium over my buy price of $7.8/share. I started buying MNS Software shares just a month ago. While the offer indicates something positive, I think it undervalues the company and as such it should be rejected. I will be buying more on such an event and the inevitable pullback.

MNS Software falls into a category of very specialized/niche players. All such players, especially when they have a decent customer list, become very attractive for a potential buyer at some point. For an investor, they become attractive after repeated earnings disappointments.

Other similar niche players I like:

  • Opnet Technologies (OPNT): Very attractive after the miss last week. Don't own any yet, but will buy at the first opportunity.
  • Insightful (IFUL): Have mentioned it earlier. Still attractive.
  • Magma Design Software (LAVA): The price became reasonable after the recent earnings miss. The EDA software maker should be in the crosshairs of the majors.
    While on EDA, the top player, Synopsys (SNPS) is now a very good value play after sequential misses. Synopsys earlier tried to acquire Monolithic Systems (MOSY) but the deal fell off. They must still be planning on other acquisitions. MOSY itself remains attractive to other EDA majors.
  • Visual Networks (VNWK): Somewhat speculative, but insider buying and existing customer base make it a good takeover target. Made short term profits a couple of times in the past, but now holding for the final episode.
  • Stratasys (SSYS): Expensive right now, but this 3D printer maker should be a good buy on any significant pullback.

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