Eminence Capital Adds to Novellus Systems (NVLS) ~ market folly

Tuesday, May 10, 2011

Eminence Capital Adds to Novellus Systems (NVLS)

Ricky Sandler's hedge fund Eminence Capital just filed a 13G with the SEC regarding shares of Novellus Systems (NVLS). Per trading activity on April 29th, the hedge fund has disclosed a 6.3% ownership stake in NVLS with 5,623,442 shares.

This marks almost a 66% increase in their position size. At the end of 2010, they owned 3,390,000 shares of NVLS. It looks as though Eminence added to their stake on the recent sell-off after the company's guidance missed analyst estimates. Novellus recently announced the pricing of $600 million senor convertible notes due 2041.

Sandler started Eminence after previously being an analyst at Mark Asset Management. In the past, he also started Fusion Partners at 25 with Wayne Cooperman. As their investment styles differed, Sandler started Eminence.

He employs a 'quality value' approach by spending equal amounts of time on the long and short side of the portfolio. Eminence employs gross leverage and typically runs 120% long and 70% short. Last year we saw that Eminence favored high quality large caps.

Per Google Finance, Novellus Systems "together with its subsidiaries, develops, manufactures, sells and supports equipment used in the fabrication of integrated circuits, commonly called chips or semiconductors."

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