At the beginning of October, billionaire Ken Griffin’s Citadel Investment Group owned 3.3 million shares of Fairchild Semiconductor International (NYSE:FCS), a $1.9 billion market cap designer and manufacturer of integrated circuit products. This was over five times what the large hedge fund had owned three months earlier, suggesting that Griffin and his investment team were bullish on the stock. See the rest of Griffin’s stock picks. That position has since increased to 5.8 million shares, according to a recent filing with the SEC.
In the third quarter of the year, Fairchild experienced an 11% decline in revenue compared to the same period in 2011, roughly in line with its performance in the first half of 2012. Lower sales occurred in all three major segments of the company’s business. With gross margins declining, and operating expenses down only slightly, net income dropped 31%. Cash flow from operations has been cut in half for the first nine months of 2012 compared to the same period a year ago as well.
The stock hasn’t reacted much to the company’s recent poor performance, and as a result Fairchild Semiconductor International trades at 31 times trailing earnings. Analyst consensus is that the business will improve in 2013, and so the forward P/E falls to 19, but we’d be wary of relying too heavily on the company’s results matching these forecasts- they seem optimistic, and depend on the business not just halting but in fact reversing its recent decline. We’d also note that at least statistically Fairchild is quite exposed to the broader economy, with a beta of 2.4.
Citadel wasn’t the only billionaire active in the stock last quarter, though we can’t be sure of what other funds have done since then. Fellow billionaire Ken Fisher’s Fisher Asset Management had reported a position of 5.4 million shares of Fairchild Semiconductor International at the end of the third quarter (check out Fisher’s favorite stocks). Royce & Associates, a fund managed by Chuck Royce that tends to focus on small- and mid-cap stocks, owned a little over 14 million shares (find more stocks Royce owned).