Is IPG Photonics Stock a Buy as One Fund Builds a $9 Million Stake in the Firm?
Key Points
New York City-based S Squared Technology increased its position in IPG Photonics Corporation by 45,050 shares in the third quarter.
The overall value of the position rose by about $4.4 million from the previous period.
At quarter-end, S Squared reported holding 118,916 IPGP shares valued at $9.4 million.
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New York City-based S Squared Technology disclosed a buy of IPG Photonics Corporation (NASDAQ:IPGP), adding 45,050 shares, with a net position change of approximately $4.4 million, in a November 13 SEC filing.
What Happened
According to an SEC filing released on November 13, S Squared Technology increased its holding in IPG Photonics Corporation (NASDAQ:IPGP) during the most recent quarter. The fund added approximately 45,050 shares, bringing its total to 118,916 shares, and the reported value of the position grew by about $4.4 million to $9.4 million as of September 30.
What Else to Know
The IPG Photonics stake represents about 3.6% of 13F reportable AUM.
Top holdings after the filing:
- NASDAQ: LSCC: $25.4 million (9.7% of AUM)
- NASDAQ: KRYS: $19.3 million (7.3% of AUM)
- NASDAQ: SYM: $18.9 million (7.2% of AUM)
- NASDAQ: KTOS: $18.2 million (6.9% of AUM)
- NYSE: PRLB: $15.6 million (5.9% of AUM)
As of Friday, shares of IPG Photonics were priced at $76.34, up about 2.5% over the past year and well underperforming the S&P 500, which is up 16% in the same period.
Company Overview
| Metric | Value |
|---|---|
| Price (as of Friday) | $76.34 |
| Market Capitalization | $3.2 billion |
| Revenue (TTM) | $963.6 million |
| Net Income (TTM) | $25.6 million |
Company Snapshot
- IPG Photonics offers high-performance fiber lasers, amplifiers, diode lasers, and integrated laser systems primarily for materials processing, communications, and advanced applications.
- The company generates revenue by designing, manufacturing, and selling laser and photonics solutions to original equipment manufacturers, system integrators, and end users worldwide.
- It targets industrial, telecommunications, and data center customers, with a focus on sectors requiring precision laser processing and optical networking equipment.
IPG Photonics Corporation is a leading provider of high-performance fiber laser technology, serving global industrial and communications markets.
Foolish Take
S Squared's move should be interesting to long-term investors because it reflects conviction at a moment when sentiment around industrial technology remains a bit fragile, particularly for a firm whose stock has struggled for a while. IPG Photonics has spent several years navigating cyclical demand, restructuring costs, and investor skepticism, leaving shares down roughly 70% from early-pandemic levels. Yet the company’s latest results suggest the worst may be behind it.
In the third quarter, IPG reported revenue of $250.8 million, up 8% year over year, alongside a sharp recovery in profitability. Gross margin improved to 39.5%, and the company returned to GAAP profitability with net income of $7.5 million, compared with a significant loss a year earlier. Meanwhile, adjusted EBITDA rose to $37 million, supported by stronger materials processing demand and improving cost absorption. Management also highlighted a book-to-bill ratio near one, signaling stable end-market conditions heading into the fourth quarter.
Within S Squared's portfolio, IPG sits alongside other technology and defense-oriented holdings, suggesting this isn't a speculative trade but a bet on operational leverage and a cyclical recovery. Ultimately, the company's balance sheet strength, improving margins, and exposure to automation and advanced manufacturing could offer upside for patient investors.
Glossary
13F reportable assets: Assets that institutional investment managers must disclose quarterly to the SEC under Form 13F.
Assets under management (AUM): The total market value of investments managed by a fund or investment firm.
Net position change: The difference in the value or size of a fund's holding in a security after a transaction.
Top holdings: The largest investments in a fund's portfolio, typically ranked by market value.
Stake: The amount or percentage of ownership a fund or investor holds in a company.
Original equipment manufacturers (OEMs): Companies that produce parts or equipment used in another company's end products.
System integrators: Firms that design and implement complex systems by combining hardware and software from multiple sources.
Fiber lasers: Lasers that use optical fibers as the active gain medium, offering high efficiency and precision.
Diode lasers: Semiconductor devices that produce laser light, commonly used in communications and industrial applications.
Materials processing: Industrial applications involving the modification or fabrication of materials using tools like lasers.
TTM: The 12-month period ending with the most recent quarterly report.
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