What Happened:
Shares of Semiconductor company Semtech (NASDAQ:SMTC) jumped 5.07% today after the company agreed with investment firm Lion Point Capital to nominate two new independent directors to Semtech's board. Lion Point Capital owns approximately 4% of Semtech's outstanding shares of common stock. Lion Point focuses on undervalued companies where the firm can also push for improvements in operations or go-to-market.
Investors reacted positively despite the worries about the stability of the financial sector. UBS agreed to buy struggling Credit Suisse over the weekend, with the Swiss government also stepping in to provide assistance to the troubled banking sector. The Fed will announce its latest interest rate decision on Wednesday. A quarter-point hike is widely anticipated as the central bank tries to balance its goal of slowing down the economy with its role of ensuring financial stability.
What is the market telling us:
Semtech's shares are quite volatile and over the last year have had 20 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
Semtech is up 6.81% since the beginning of the year, but at $30.91 per share it is still trading 58% below its 52-week high of $72.88 from March 2022. Investors who bought $1,000 worth of Semtech's shares 5 years ago would now be looking at an investment worth $746.6.
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