Kerrisdale Capital's Sahm Adrangi on $ACMR's price dislocation between Shanghai and NASDAQ listings

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Feb 26, 2025

Sahm Adrangi, Chief Investment Officer at Kerrisdale Capital, shares his insights on ACM Research, a key player in semiconductor equipment. He discusses the intriguing valuation discrepancies between its U.S. and Shanghai listings, emphasizing market dynamics and missed opportunities. Sahm dives into competitive factors influenced by Chinese regulations and the implications of U.S.-China tensions. He also addresses the capital allocation strategies and the potential impacts of slowing AI investment on growth prospects. A fascinating take on a complex market!

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ANECDOTE

Mayonnaise Mayhem

Andrew Walker tells a story about a coupon loophole that allowed extreme discounts.
This loophole caused issues for advertisers and highlights the value of expert networks.

INSIGHT

Semiconductor Oligopoly

ACMR, a wafer fabrication equipment company, focuses on tools used by semiconductor fabs.
The semiconductor industry tends to be oligopolistic due to the symbiotic relationship between fabs and tool makers.

INSIGHT

ACMR's China Advantage

ACMR has grown in China due to preferential treatment but faces challenges expanding internationally.
International fabs hesitate to replace existing tools, creating a higher barrier to entry for ACMR.

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Sahm Adrangi, Chief Investment Officer at Kerrisdale Capital, joins the podcast to share his thesis on ACM Research, Inc. (NASDAQ: ACMR), develops, manufactures and sells semiconductor process equipment spanning cleaning, electroplating, stress-free polishing, vertical furnace processes, track, PECVD, and wafer- and panel-level packaging tools, enabling advanced and semi-critical semiconductor device manufacturing.

Kerrisdale Capital's $ACMR write-up: https://www.kerrisdalecap.com/investments/acm-research-acmr/

For more information about Kerrisdale Capital, please visit: https://www.kerrisdalecap.com/

Chapters:

[0:00] Introduction + Episode sponsor: Alphasense

[3:28] What is ACM Research and why are they so interesting to Sahm

[7:27] Chinese competitors

[10:24] What is Sahm seeing with $ACMR that the market is missing

[12:54] Discounts

[15:34] $ACMR business vs. politics/regulatory risks

[22:48] China risk / listing in Asian market / US-listed company with operations in China, CEO being US citizen

[29:54] Is there a lack of urgency from management? (Capital Allocation strategy)

[33:54] $ACMR valuation

[37:33] Technical sophistication of the cleaning tools

[41:19] How exposed to slow down in AI spending and business growth prospects

[48:10] $ACMR final thoughts

[50:39] What could go wrong / what could break $ACMR thesis for Sahm

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