October, 2022 marked a special time since the euphoric market highs during the pandemic. The S&P 500 index was down by about 25% and it was a particularly scary time to be in the equity markets. The technology sector was hit extremely hard––the rising interest rates acted like gravity and the entire sector saw a sharp pullback to seemingly real valuations.

On a Monday morning, I ran my screener to look for companies trading below net cash. On top of this list was an obscure company that designs and manufactures cleaning equipment for chip wafers, ACM Research. Although the company was based out of Fremont, CA, the production and majority sales were in China and Taiwan. At the time, the entire market cap of the company (roughly $480M or $6.50/share) was less than the total liabilities subtracted from the cash on hand. This must be because the company is losing money through the nose, I thought almost immediately. But much to my surprise, the company was crushing revenue and growth estimates quarter after quarter, with 48% revenue growth since 2017 and 59% net income growth over the same time. A profitable tech enterprise selling at almost classic Buffett cigar-butt levels? There must be something I’m missing, or so I thought. I sat through the next earnings call and the management sounded very optimistic about growth while preserving capital in a tough financing environment and posted a net-profit once again, with a 14% YoY growth compared to 2021. Moreover, the team looked exceptional and very skilled in their field. One of the board members, for example, is Chenming Hu, a TSMC Distinguished Professor Emeritus at UC Berkeley and a recipient of the National Medal of Technology and Innovation by President Obama. The only reasonable explanation for the price decline was general market sell-off combined with excessive fear due to geo-political tension between US and China along with probable trade restrictions. It almost seemed too good to be true.

At this point, the price had already moved around 40% since I first ran my screener. However, I still couldn’t build enough conviction and trust my own findings. I kept an eye on the company for the following months, hoping for a better bargain to find a good entry point. Little did I know, my thesis for the sharp discount was indeed correct and the stock never saw the same price levels again. As of writing, the company trades for $1.2B or $18.7/share. Had I bought the company when I first looked into it, it could’ve been my best performing stock in 2023, a potential 3x bagger and blown past all the broken biotechs (which in all fairness, also did pretty well) where I was mostly focused throughout the year.

I don’t own this company and this post is slightly different from what I normally write but it’s a helpful reminder to take action when you’ve found something good. It might not be around forever.