Kulicke & Soffa shares surge after investor urges buyback

Kulicke & Soffa Industries jumped nearly 7% Tuesday after Lemelson Capital Management announced it was building a stake in the semiconductor and LED equipment maker, saying the company is "absurdly" undervalued

In a letter to CEO Bruno Guilmart, investment manager Emmanuel Lemelson said he had amassed a stake of nearly 1% stake and plans to continue buying. Lemelson applauded management and said he's supportive of its strategy. But Lemelson said the current share price doesn't reflect the company's intrinsic value.

Shares rose nearly 10% before closing up 81 cents to $13.01 in triple normal trading volume.

Lemelson says the company's $556 million cash hoard, which represents about 60% of its $1 billion market capitalization, could easily finance a large share repurchase program.

Officials at the Singapore based firm could not be reached Tuesday. The company, which also makes equipment used in electrical wiring, has previously said it wanted to reserve a large cash position for potential acquisitions. It's scheduled to report second-quarter results April 29.

Shares are up more than 1,000% from an early 2009 bottom. Still, Lemelson says they should be trading at twice current levels.

Lemelson made news earlier this month when the investment firm said pro wrestling firm World Wrestling Entertainment was way overvalued, sending the shares down more than 35%.

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