In this piece we will take a look at the ten best semiconductor stocks to invest in according to Ken Griffin’s Citadel Investment Group.
Mr. Kenneth Griffin is an American investor who is the majority owner, the chief executive officer (CEO), and co-chief investment officer (CIO) of Citadel LLC, one of the largest hedge funds in America.
Mr. Griffin set up Citadel in 1990 and since then he has developed himself into what can only be described as a tycoon in the investment world. The executive has an entrepreneurial spirit which let him run a mail-order firm out of his home during his time in high school. This spirit was recognized by the illustrious Harvard University, which let Mr. Griffin in its prestigious halls in 1986 when the executive went to the university to pursue his bachelor’s in arts (B.A.).
It was at Harvard that the now billionaire hedge fund investor started dabbling in the stock market. Mr. Griffin was sufficiently charismatic to convince Harvard’s management to let him install a satellite dish at the university to enable him to receive real time stock quotes. He used these to bet on the stock market and would go on to open a brokerage account at the investment firm Merrill Lynch.
Mr. Griffin’s first hedge fund, which he helped set up, was established while he was at Harvard. It had a capital of $265,000 and ended up targeting the stock market during the infamous Black Monday crash. Griffin would go on to graduate from Harvard with a degree in economics in 1989.
A year later he would go on and set up Citadel Investment Group, and the rest is history. At the time he created the firm, it had $4.6 million in capital and was initially named the Wellington Financial Group, before changing its name to Citadel in 1994. By 2001, Citadel would go on to grow its assets to $4 billion, reflecting Mr. Griffin’s remarkable insight into the financial world.
However, even this pales when compared to the fund’s latest portfolio value. According to Insider Monkey’s research, as the fourth quarter of last year came to an end, Citadel LLC had a portfolio worth a staggering $489 billion. The bulk of these are in the form of long/short positions in a variety of companies, but in this piece, we will focus exclusively on the firm’s semiconductor holdings. The top three holdings in the chip industry are in Advanced Micro Devices, Inc. (NASDAQ:AMD), Marvell Technology, Inc. (NASDAQ:MRVL), and NVIDIA Corporation (NASDAQ:NVDA).
Ken Griffin of Citadel Investment Group
Our Methodology
In order to decipher the inner workings of Mr. Griffin’s mind when it comes to investing in semiconductor firms, we scanned the hundreds of positions present in his firm’s investment portfolio as of the fourth quarter of last year. This enabled us to sift out the top ten companies, which were then studied through their analyst coverage, investor letters, earnings, large holdings, and hedge fund sentiment generated through Insider Monkey’s survey of 924 funds for Q4 2021.
Best Semiconductor Stocks to Invest in According to Ken Griffin’s Citadel Investment Group
10. Skyworks Solutions, Inc. (NASDAQ:SWKS)
Citadel Investment Group’s Stake Value: $94 million
Percentage of Citadel Investment Group’s 13F Portfolio: 0.01%
Number of Hedge Fund Holders: 41
Skyworks Solutions, Inc. (NASDAQ:SWKS) is a semiconductor company whose products primarily deal with signals and communications management. Some of these are chips such as converters and switches, and they are used in gadgets such as smartphones.
Mr. Griffin’s investment firm owned 608,431 Skyworks Solutions, Inc. shares as the fourth quarter of last year came to an end. These were worth $94 million and they represented a tiny fraction of the investment portfolio. An Insider Monkey Q4 2021 survey of 924 hedge funds revealed that 41 also owned the company’s shares.
As its first fiscal quarter came to an end, Skyworks Solutions, Inc. had brought in $1.5 billion in revenue and $3.14 in non-GAAP EPS, beating analyst estimates for both. B.Riley lowered the company’s price target to $175 from $210 in February 2022, due to worries about seasonality affecting the company’s short term performance.
Skyworks Solutions, Inc. largest investor is Noam Gottesman’s GLG Partners. It owns 871,996 shares that are worth $135 million.
Skyworks Solutions, Inc. is among Citadel Investment’s top chip stocks, joining others such as Marvell Technology, Inc., Advanced Micro Devices, Inc., and NVIDIA Corporation.
9. Texas Instruments Incorporated (NASDAQ:TXN)
Citadel Investment Group’s Stake Value: $99 million
Percentage of Citadel Investment Group’s 13F Portfolio: 0.02%
Number of Hedge Fund Holders: 57
Texas Instruments Incorporated (NASDAQ:TXN) is one of the oldest semiconductor firms in the world that was set up in the United States at the time of the beginning of the chip revolution in the late 1900s. Its devices are related mostly to power management and consumption in several gadgets such as smartphones and laptops.
As its fiscal Q4 came to an end, Texas Instruments Incorporated had earned $4.8 billion in revenue and $2.27 in GAAP EPS, a set of results that let it beat analyst estimates for both. The company announced a new power amplifier chip in January 2022, which can support frequencies as high as 3GHz.
By the end of Q4 2021, Citadel Investment had a $99 million stake in Texas Instruments Incorporated by owning 528,333 shares. During the same time period, 57 of the 924 hedge funds surveyed by Insider Monkey also held a stake in the company.
Jean-Marie Eveillard’s First Eagle Investment Management is Texas Instruments Incorporated’s largest investor through a $625 million stake.
Distillate Capital mentioned the company in its Q3 2021 investor letter. Here is what the fund said:
“The largest exited positions were Oracle, which outperformed significantly, and Texas Instruments and Honeywell, which were roughly flat versus the market in the quarter but were edged out for inclusion by other stocks that became even more attractively valued.”
8. Broadcom Inc. (NASDAQ:AVGO)
Citadel Investment Group’s Stake Value: $101 million
Percentage of Citadel Investment Group’s 13F Portfolio: 0.02%
Number of Hedge Fund Holders: 67
Broadcom Inc. (NASDAQ:AVGO) is a communications chip and equipment provider which sells products that are used in routers and other devices such as smartphones. It is one of the leading players in its industry, competing alongside the likes of larger companies such as QUALCOMM Incorporated (NASDAQ:QCOM).
Mr. Griffin’s Citadel Investment owned 153,245 Broadcom Inc. shares by the end of the fourth quarter of last year. These were worth $101 million and represented 0.02% of its investment portfolio. An Insider Monkey survey of 924 hedge funds for Q4 2021 outlined that 67 had owned the company’s shares.
Broadcom Inc. reported $7.7 billion in revenue and $8.39 in non-GAAP EPS for its first fiscal quarter, beating analyst estimates for both metrics. Truist raised its price target to $686 from $659 in March 2022, sharing optimism about the company’s enterprise and cloud computing platforms.
Broadcom Inc.’s largest investor is William Von Mueffling’s Cantillon Capital Management. It owns one million shares worth $669 million.
In a third quarter 2021 investor letter, Miller Howard Investments mentioned Broadcom Inc. and stated that:
“Technology remains important in our portfolios, although the sector weights have come down over the past year. We now hold Broadcom (AVGO) of which have strong growth prospects, yet attractive valuations in our view. Unlike many younger tech companies, we believe our holdings should significantly benefit from an upturn in the economy.”
7. ASML Holding N.V. (NASDAQ:ASML)
Citadel Investment Group’s Stake Value: $116 million
Percentage of Citadel Investment Group’s 13F Portfolio: 0.02%
Number of Hedge Fund Holders: 41
ASML Holding N.V. (NASDAQ:ASML) is a company that is integral to the semiconductor industry. It is the only firm in the world capable of manufacturing advanced machines capable of fabricating chips with the latest technologies. This makes it indispensable to all of the world’s chipmakers, large or small.
ASML Holding N.V. reported €4.98 billion in revenue and €4.27 in GAAP EPS, beating analyst estimates only for revenue. Investment firm Jefferies set a €700 price target for the firm in February 2022.
Citadel Investment had a $116 million stake in ASML Holding N.V. by the end of the fourth quarter of last year. This came through it owning 146,801 shares. 41 out of 924 hedge funds part of Insider Monkey’s survey for the same time period held stakes in the company.
Ken Fisher’s Fisher Asset Management is ASML Holding N.V.’s largest investor according to Insider Monkey’s research. It has a $3.4 billion stake in the company through owning 4.2 million shares.
Polen Capital mentioned ASML Holding N.V. in its Q2 2021 investor letter as it outlined that:
“Dutch technology company ASML is the world’s only supplier of photolithography systems to leading-edge semiconductor manufacturers. It is a gross simplification and a valid point to note that ASML’s technology enables the computing technology we use today. For years, ASML engineers bent the laws of physics and enabled Moore’s Law—which states that computer chips will become faster and cost less—to progress.
Incremental innovation gains mushroomed with the rollout of Extreme Ultraviolet (EUV) technology. We were impressed by management’s recent acknowledgment that demand for ASML Holding N.V. ’s lithography systems is exceeding their prior expectations. Recent announcements by management and major customers for ASML give us even more confidence in the sustainability of growth. We believe ASML Holding N.V. could grow its earnings at a high-teens rate over the coming five years.”
6. Intel Corporation (NASDAQ:INTC)
Citadel Investment Group’s Stake Value: $218 million
Percentage of Citadel Investment Group’s 13F Portfolio: 0.04%
Number of Hedge Fund Holders: 74
Intel Corporation (NASDAQ:INTC) is one of the largest semiconductor firms in the world that is widely credited for having developed the modern day microprocessor. It manufactures products primarily in the United States but has also diversified its non-core operations globally.
Mr. Griffin’s hedge fund owned a stake of $218 million in Intel Corporation by the end of last year’s fourth quarter. This came in the form of 4.2 million shares and it represented 0.04% of the investment portfolio. 74 of the 924 hedge funds targeted by Insider Monkey’s research for the quarter had also owned a stake in the company.
Intel Corporation raked in $19.5 billion in revenue and $1.09 in non-GAAP EPS during its fiscal Q4, letting it beat analyst estimates for both. The company’s chief executive officer Mr. Patrick Gelsinger is spearheading a production overhaul at the company, through which the company intends to not only catch up to competitors in mass producing the latest semiconductors but also to open the doors of its facilities to other fabless semiconductor firms.
Seth Klarman’s Baupost Group is Intel Corporation’s largest investor according to Insider Monkey’s research. It has a stake of $928 million via owning 18 million shares.
Third Point Management mentioned Intel Corporation in its fourth quarter 2021 investor letter and stated that:
“2021 was a highly productive year for Intel‘s new CEO, Pat Gelsinger. Despite the stock’s tepid results, we see a compelling, underappreciated fundamental story. Intel’s “brain drain” – a key part of our thesis when we first sought to help the company confront its long-time underperformance – appears to be reversing. Since joining Intel, Mr. Gelsinger has not only brought back prominent Intel former employees but has also attracted talents from competitors such as Advanced Micro Devices, Inc., Nvidia, Apple, and, most recently, Micron’s stellar Chief Financial Officer, David Zinsner.
We are encouraged by Intel Corporation’s aggressive investment plan, including a recently announced fabrication plant in Ohio and acquisition of Tower Semiconductors. We knew from the start that Intel’s turnaround would be complex and lengthy, and we have been pleased to see Mr. Gelsinger sacrifice near-term earnings for long-term growth.
Finally, after a series of blunders across its PC and Server product lines, Intel is finally receiving good reviews for one of its upcoming processors: Alder Lake. Tom’s Hardware, a preeminent hardware publication, called Alder Lake “a cataclysmic shift in Intel Corporation’s battle against AMD’s potent Ryzen 5000 chips.” While this is just one product across a broad lineup, and given it will take time to achieve leadership across them all, we are encouraged by these tangible signs of progress under Mr. Gelsinger’s leadership. With talent returning, an improving product suite, and a willingness to invest for growth, we believe Intel’s prospects have turned the corner. We expect that the company’s upcoming analyst day will be an ideal time for Mr. Gelsinger to articulate the progress he has made and begin to reset expectations for the company.”
Intel Corporation is joined by Advanced Micro Devices, Inc., Marvell Technology, Inc., and NVIDIA Corporation in the list of Mr. Griffin’s top semiconductor stock holdings.
5. QUALCOMM Incorporated (NASDAQ:QCOM)
Citadel Investment Group’s Stake Value: $301 million
Percentage of Citadel Investment Group’s 13F Portfolio: 0.06%
Number of Hedge Fund Holders: 76
QUALCOMM Incorporated is an American company known for its network and smartphone products. These are used to power devices such as smartphones and routers, alongside other communications equipment.
Citadel Investment Group owned 1.6 million QUALCOMM Incorporated shares during the fourth quarter of last year, in a $301 million stake which represented 0.06% of its portfolio. During the same time period, 76 of the 924 hedge funds polled by Insider Monkey also held the company’s shares.
By the end of its fiscal Q1, QUALCOMM Incorporated had reported $10.7 billion in revenue and $3.23 in non-GAAP EPS, which let it beat analyst estimates for both. In a big announcement, BWM revealed in March 2022 that had entered into a partnership with QUALCOMM Incorporated for developing automated driving assistance platforms.
QUALCOMM Incorporated’s largest investor is Panayotis Takis Sparaggis’ Alkeon Capital Management which owns 5.3 million shares worth $970 million.
4. Micron Technology, Inc. (NASDAQ:MU)
Citadel Investment Group’s Stake Value: $307 million
Percentage of Citadel Investment Group’s 13F Portfolio: 0.06%
Number of Hedge Fund Holders: 83
Micron Technology, Inc. (NASDAQ:MU) is a semiconductor company that specializes in developing memory products. These are semiconductors that aid primary chips such as a central processing unit (CPU) or a graphics processing unit (GPU) for conducting their workloads in a system.
As its fourth fiscal quarter ended, Micron Technology, Inc. had raked in $7.69 billion in revenue and $2.16 in non-GAAP EPS, beating analyst estimates for both. Citi kept a $120 price target for the company in February 2022, outlining that memory prices will increase in the second half of this year and spell into a positive catalyst for the company.
Mr. Griffin’s investment firm had a $307 million stake in Micron Technology, Inc. during Q4 2021. This came through owning 3.3 million shares and it represented 0.06% of the firm’s investment portfolio. During the same time period, 83 out of the 924 hedge funds polled by Insider Monkey also owned the company’s shares.
Micron Technology, Inc.’s largest investor is Paul Marshall and Ian Wace’s Marshall Wace LLP. It has a stake of $507 million via 5.4 million shares.
Hazelton Capital Partners mentioned Micron Technology, Inc. in its Q3 2021 investor letter. Here is what the firm said:
“It’s hard to explain how shares of Micron Technology, manufacture of DRAM and NAND semiconductor chips, can fall during a global chip shortage. In most industries, focusing on demand can give you a clear insight into what lays ahead for a company. Today, the memory and storage chip industry is no different. However, in the past, companies focused on market share led to the reckless build out of chip fabrication plants (FABs), oversupply, falling average selling prices (ASPs) of memory and storage chips, lower margins, and declining cash flows. As the industry consolidated – there are now just 3 major producers of DRAM and 5 on the NAND side – rational behavior among the key players began to take hold as competitors began focusing more on R&D. Currently, chip pricing remains cyclical although less so than in the past and that cyclicality has a long-term upward bias. The ongoing transition to newer and more robust platforms (3D 176-layer NAND & 1-Alpha node DRAM) has provided the memory and storage chip industry with improved supply capacity under its current manufacturing footprint, ultimately pressuring ASPs. Over the past three years, as most of the large platform conversions have already taken place, being able to add more bits per wafer has reached a saturation point. With no major FAB build outs planned in the near-term by competitors Samsung or SK Hynix, constrained supply and flattening cost curves should lead to durable and upward sloping ASPs once the recent volatility from the chip shortage subsides.
Currently Micron Technology trades at just 8x 2022 estimate earnings. MU is expecting growth in both DRAM and NAND not just from the supply of more chips to data centers, artificial intelligence, the auto sector, and mobile devices, but also from greater demand for gigabyte capacity per unit within those segments. With a healthy balance sheet, improving return on invested capital, and expanding cash flows, not only should Micron benefit from improving future earnings but its multiple should also reflect the transition to a flattening cost curve.”
3. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Citadel Investment Group’s Stake Value: $343 million
Percentage of Citadel Investment Group’s 13F Portfolio: 0.07%
Number of Hedge Fund Holders: 70
Advanced Micro Devices, Inc. is a semiconductor firm that has risen to fame over recent years after a remarkable turnaround spearheaded by its chief executive officer Dr. Lisa Su. The company has rapidly gained market share in the central processing unit (CPU) and graphics processing unit (GPU) industries through strong designs and the latest manufacturing technologies courtesy of its primary manufacturing partner.
Citadel Investment had a $343 million stake in Advanced Micro Devices, Inc. during Q4 2021, via 2.3 million shares. An Insider Monkey survey of 924 hedge funds for the same time period outlined that 70 had holdings in the company.
For its fiscal Q4, Advanced Micro Devices, Inc. posted $4.8 billion in revenue and $0.92 in non-GAAP EPS, in a stellar set of results that saw massive growth and beat analyst estimates across the board. Daiwa raised the company’s price target to $150 from $140 in February 2022, outlining that its research has revealed healthy orders for the company’s products in the enterprise segment.
Ken Fisher’s Fisher Asset Management is Advanced Micro Devices, Inc.’s largest shareholder according to Insider Monkey’s research through a $2.8 billion stake that comes via 19.9 million shares.
Carillon Tower Advisers mentioned Advanced Micro Devices, Inc. in its Q4 2021 investor letter, outlining that:
“Advanced Micro Devices (AMD) supplies semiconductor chips for central processing units (CPUs) and graphic processing units (GPUs). The firm has been gaining share against its primary competitor in the datacenter server CPU space, as this rival has been unable to match the design and manufacturing capabilities of AMD and its partners. Investors are also looking forward to the closing of the previously announced merger with a semiconductor manufacturer that is another one of the portfolio’s holdings. The merger will increase AMD’s capabilities in the Field Programmable Gate Array (FPGA) chip space, and the combined company should possess the potential to win additional market share in the datacenter chip market.”
2. Marvell Technology, Inc. (NASDAQ:MRVL)
Citadel Investment Group’s Stake Value: $466 million
Percentage of Citadel Investment Group’s 13F Portfolio: 0.09%
Number of Hedge Fund Holders: 61
Marvell Technology, Inc. is a chip company offering products such as signals processing devices and applications processors for use in gadgets such as WiFi routers and smartphones.
Marvell Technology, Inc. earned $1.34 billion in revenue and $0.50 in non-GAAP EPS for its fiscal fourth quarter, beating analyst estimates for both. 61 out of the 924 hedge funds polled by Insider Monkey during Q4 2021 had owned the company’s shares.
Mr. Griffin’s Citadel Investment owned a $466 million stake in Marvell Technology, Inc. via 5.3 million shares as the fourth quarter of last year came to an end. After Citadel, which is the company’s largest investor, Marvell Technology, Inc.’s largest holding belongs to Brian Ashford-Russell and Tim Woolley’s Polar Capital, which owns 3.3 million shares worth $290 million.
Carillon Tower Advisers in its fourth quarter 2021 investor letter mentioned Marvell Technology, Inc. and stated that:
“Marvell Technology provides infrastructure semiconductor solutions. Investors have recently appreciated the particularly strong growth the company has posted, as it is winning designs in the datacenter server market as well as winning notable contracts in the upcoming 5G wireless infrastructure build-outs. Supply chain issues had hampered growth in 2021 for the company, but with some improvements there recently, we believe Marvell is set to exhibit robust growth in the upcoming year.”
1. NVIDIA Corporation (NASDAQ:NVDA)
Citadel Investment Group’s Stake Value: $697 million
Percentage of Citadel Investment Group’s 13F Portfolio: 0.14%
Number of Hedge Fund Holders: 111
NVIDIA Corporation is another semiconductor designer that has managed to secure its place at the top of the food chain through strong product performance. The company designs and sells graphics processing units (GPUs) for a wide variety of applications such as video gaming, professional work, enterprise computing, and vehicles.
For its fourth fiscal quarter, NVIDIA Corporation reported $7.6 billion in revenue and $1.32 in non-GAAP EPS, beating analyst estimates for both. Mizuho raised the company’s price target to $355 from $345 in February 2022, outlining that the company has nothing but growth ahead of it.
Citadel Investment Group owned 2.3 million NVIDIA Corporation shares which were worth $697 million and represented 0.14% of its portfolio during Q4 2021. Insider Monkey’s survey of 924 hedge funds for the same time period revealed that 111 also had a stake in the company.
NVIDIA Corporation’s largest investor is Ken Fisher’s Fisher Asset Management with a $1.5 billion stake courtesy of 5.5 million shares suggests Insider Monkey’s research.
In a third quarter 20221 investor letter, Harding Loevner had the following to say about NVIDIA Corporation:
“The proliferation of devices using chips, whether EVs, “things” in lol, or embedded systems more generally, results in the generation of oceans of data potentially needing to be stored, processed, and analyzed. NVIDIA, the leading chip designer wellknown for its graphic processing units and its complementary CUDA software ecosystem, is at the forefront of the effort to provide the analytical platform needed to unlock the full potential of such specialist processors.”
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This article is originally published at Insider Monkey.
