Shares of
Allegro Microsystems
fell by more than 10% this week, after a Barron’s column aired a debate over the chip supplier’s profit prospects.
On Wednesday, a securities filing showed why.
Allegro’s biggest outside investor sold five million shares, worth about $189.3 million, according to the filing. The private-equity firm One Equity Partners has been a controlling shareholder of Allegro since the chip firm (ticker: ALGM) went public in a 2020 spinoff from Japan’s
SanKen Electric
(6707. Japan). One Equity and SanKen appoint Allegro directors under a shareholders’ agreement.
Allegro stock had fetched over $38 a share last week. It was trading at around $35 on Thursday.
The sale reduced One Equity’s stake from 9.2% of Allegro’s shares, to 6.6%. One Equity sold a similar amount of stock in February. SanKen holds 51% of Allegro stock.
The Barron’s piece noted that Allegro reports profit margins that greatly exceed its closest competitor in the market for magnetic sensor chips. Some investors have wondered if Allegro’s margins benefit from its dealings with related parties: It shares ownership of a semiconductor wafer supplier with SanKen, and sells finished chips to SanKen. Allegro said its accounting was proper.
Neither One Equity nor Allegro responded to Barron’s questions about Wednesday’s stock sale.
Write to Bill Alpert at [email protected]
Corrections & amplifications: One Equity Partners filed to sell five million shares of Allegro Microsystems on Sept. 6, 2023. An earlier version of this article incorrectly said half a million shares were sold.
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