In this piece we will take a look at the ten best semiconductor stocks to invest in according to Noam Gottesman’s GLG Partners.
Noam Gottesman is a British-American investor who is known for having founded the investment firm GLG Partners. The executive was one of the cofounders of this investment firm, which he helped set up in 1995. 15 years afterward, he and his partners sold GLG Partners to the Man Group, which is one of the oldest businesses in the world. Two years later, in 2012, he would retire from his role as the co-chief executive officer (CEO) of GLG Partners. After this, he went on to create National Foods, which is now Europe’s largest frozen food company.
Following its acquisition by the Man Group, GLG Partners was renamed Man GLG. The firm employs several kinds of investment strategies, including long-only, long/short, and emerging market funds. It is headquartered in London, United Kingdom, and has offices in New York, United States, Hong Kong, and Zurich, Switzerland.
Mr. Gottesman’s endeavors in the financial world have made him into a billionaire. According to Forbes Magazine, the executive, who is currently the CEO of TOMS Capital Investment Management, an investment fund based out of New York, was worth $2.5 billion as of March this year, making him one of the richest people on Earth.
Man GLG’s investment portfolio was worth $31 billion as of the end of the fourth quarter of last year. A cursory look at the companies present in it shows that while the top holdings are concentrated in the technology and semiconductor industry, overall, the fund takes a balanced investment approach.
The concentration in semiconductors is good news as that’s what we’ll be talking about in this piece. The top three chip investments in Man GLG’s portfolio are in the Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM), Intel Corporation (NASDAQ:INTC), and Texas Instruments Incorporated (NASDAQ:TXN). These represent a broad approach that covers chip manufacturing, personal computing, and semiconductor design.
Noam Gottesman of GLG Partners
Our Methodology
To determine which semiconductor firms are on Man GLG’s radar, we took a look at its regulatory filings for Q4 2021. This enabled us to sift out the top ten chip companies from the countless others. Following this, we took a detailed look at the firms through the lens of their investor letters, analyst coverage, earnings reports, relevant industry news, large holdings, and hedge fund sentiment gathered via Insider Monkey’s survey of 924 funds for the fourth quarter of last year.
10 Best Semiconductor Stocks to Invest In According to Noam Gottesman’s GLG Partners
10. Applied Materials, Inc. (NASDAQ:AMAT)
GLG’s Stake Value: $96.3 million
Percentage of GLG’s 13F Portfolio: 0.3%
Number of Hedge Fund Holders: 79
Applied Materials, Inc. (NASDAQ:AMAT) is an American company that is directly involved in chip manufacturing. The company is one of the few in the world that is capable of producing machines that are used in semiconductor fabrication. It is headquartered in Santa Clara, California, and is one of the oldest chip companies in the world after being founded in 1967.
Man GLG owned 612,192 Applied Materials, Inc. shares during the fourth quarter of last year. This translated into a stake worth $96.3 million which represented 0.3% of its portfolio. 79 out of the 924 hedge funds polled by Insider Monkey in Q4 2021 also held a stake in the company.
As its first fiscal quarter came to an end, Applied Materials, Inc. brought in $6.2 billion in revenue and $1.89 in non-GAAP EPS, in a strong set of results that beat analyst estimates for both. Citi increased the company’s share price target to $180 from $178 in February 2022, due to the earnings results.
Applied Materials, Inc.’s largest investor is David Blood and Al Gore’s Generation Investment Management through a $672 million stake via owning 4.2 million shares.
LRT Capital Management mentioned Applied Materials, Inc. in its third quarter 2021 investor letter, and stated that:
“Compare Rivian to Applied Materials (AMAT), a semiconductor equipment supply company that specializes in the “frontend” (primarily patterning) of the semiconductor manufacturing process. The company makes products that are critical to making modern computer chips. It has a market cap of approximately $145 billion dollars. It, also, generated $0 from selling EVs over its lifetime. However, Applied Materials generated $21 billion in revenue and $5.1 billion in net income over the past twelve months alone in its semiconductor equipment business. Since a company that sells no EVs is worth $150 billion, then Applied Materials semiconductor business is being valued at a negative $5 billion dollars…”
Along with Intel Corporation, Taiwan Semiconductor Manufacturing Company Limited, and Texas Instruments Incorporated, Applied Materials, Inc. is one of Man GLG’s favorite semiconductor stocks.
9. QUALCOMM Incorporated (NASDAQ:QCOM)
GLG’s Stake Value: $110 million
Percentage of GLG’s 13F Portfolio: 0.35%
Number of Hedge Fund Holders: 76
QUALCOMM Incorporated (NASDAQ:QCOM) is one of the world’s largest semiconductor designers. Its products include smartphone processors, graphics processing units (GPUs), and modems alongside others that power different devices such as the Internet of Things (IoT) gadgets and automotives.
For its first fiscal quarter, QUALCOMM Incorporated brought in $10.7 billion in revenue and $3.23 in non-GAAP EPS, beating analyst estimates for both. Baird increased the company’s price target to $250 from $200 in February 2022, outlining that the company was positioned strongly despite the feared inventory correction in the semiconductor market that has plagued analysts’ minds.
Mr. Gottesman’s former investment firm held a stake of $110 million in QUALCOMM Incorporated during Q4 2021, which came by owning 603,485 shares. During the same time period, 76 of the 924 hedge funds profiled by Insider Monkey also held the company’s shares.
Panayotis Takis Sparaggis’ Alkeon Capital Management is QUALCOMM Incorporated’s largest investor. It owns 5.3 million shares worth $970 million.
8. Skyworks Solutions, Inc. (NASDAQ:SWKS)
GLG’s Stake Value: $135 million
Percentage of GLG’s 13F Portfolio: 0.43%
Number of Hedge Fund Holders: 41
Skyworks Solutions, Inc. (NASDAQ:SWKS) is an American company whose semiconductor products are present in a wide variety of technology products. The company designs and sells chips such as radios, amplifiers, converters, switches, and regulators.
Skyworks Solutions, Inc. earned $1.5 billion in revenue and $3.14 in non-GAAP EPS during its first fiscal quarter, in a set of results that saw it beat analyst estimates for both even as revenue growth remained flat annually. 41 out of the 924 hedge funds surveyed by Insider Monkey during the fourth quarter of last year owned the company’s shares, and its price target was lowered by B.Riley to $175 from $210 in February 2022 as the firm cited seasonality as a headwind for near term demand but shared optimism for the company in the long term.
As Q4 2021 came to an end, Man GLG held 871,996 Skyworks Solutions, Inc. shares that were worth $135 million and made up 0.43% of its portfolio. This marked a whopping 535% growth in activity over the previous quarter.
After Man GLG, Skyworks Solutions, Inc. largest investor is Robert Joseph Caruso’s Select Equity Group. It owns 847,787 shares worth $131 million.
7. NXP Semiconductors N.V. (NASDAQ:NXPI)
GLG’s Stake Value: $137 million
Percentage of GLG’s 13F Portfolio: 0.44%
Number of Hedge Fund Holders: 46
NXP Semiconductors N.V. (NASDAQ:NXPI) is a diversified semiconductor company whose products are present in a host of technology products. These products include smartphones, communications infrastructure, the Internet of Things (IoT) and automotives, among a few.
By the end of Q4 of 2021, Man GLG had held 604,440 NXP Semiconductors N.V. shares which were worth $137 million and constituted 0.44% of its portfolio. During the same time period, 46 of the 924 hedge funds polled by Insider Monkey had also owned a stake in the company.
At the end of its fourth fiscal quarter, NXP Semiconductors N.V. had earned $3 billion in revenue and $2.24 in GAAP EPS, in a strong set of results that saw it surpass Wall Street estimates for both. Subsequently, Truist raised the company’s price target to $265 from $250 in February 2022, stating that not only had the company delivered a “near perfect” quarter, but that its outlook was even stronger.
NXP Semiconductors N.V.’s largest investor is Ken Fisher’s Fisher Asset Management. It owns 897,844 shares worth $204.5 million.
ClearBridge Investments mentioned NXP Semiconductors N.V. in its Q3 2021 investor letter and outlined that:
“Over the last year, we have sought to improve the up capture of the portfolio by expanding exposure to the select bucket of companies growing revenues and earnings at meaningfully above-average rates and targeting large total addressable markets. Newer names in the select bucket like NXP Semiconductors N.V. have been strong contributors to relative performance over this period. We believe that owning a broader group of IT and Internet companies with different drivers to the businesses helps manage some of the risk in this relatively more expensive subsector.”
6. Synopsys, Inc. (NASDAQ:SNPS)
GLG’s Stake Value: $181 million
Percentage of GLG’s 13F Portfolio: 0.58%
Number of Hedge Fund Holders: 42
Synopsys, Inc. (NASDAQ:SNPS) is a software company that provides products that enable chip manufacturers and others to test semiconductors after they have been fabricated. It is headquartered in Mountain View, California, United States.
As Q4 2021 came to an end, Man GLG had a $181 million stake in Synopsys, Inc. which came in the form of 491,937 shares. An Insider Monkey poll covering 924 hedge funds during the same time period revealed that 42 had owned the company’s shares.
For its fiscal first quarter, Synopsys, Inc. brought in $1.27 billion in revenue and $2.40 in non-GAAP EPS, with its EPS beating analyst estimates and the revenue meeting them. KeyBanc raised the company’s share price target to $445 from $395 in January 2022, stating that the Electronic Design Automation (EDA) industry has now started to enter double digit growth. Synopsys, Inc.’s EDA tools are used by semiconductor firms.
Synopsys, Inc.’s largest investor is Panayotis Takis Sparaggis’ Alkeon Capital Management. It owns 2.6 million shares that are worth $970 million.
Synopsys, Inc. was mentioned by Carillon Tower Advisers in its fourth quarter 2021 investor letter. Here is what the firm said:
“Synopsys is a semiconductor software company that supplies electronic design automation solutions to the global electronics market. The firm’s shares outperformed in the quarter after management outlined a longer-term vision at the company’s analyst day and suggested a higher level of growth going forward than it has achieved in the previous few years. Synopsys is becoming a key supplier of leading-edge semiconductor designs that are getting increasingly more difficult for chip companies to build on their own. On top of accelerating topline growth, the company also posts healthy profits and robust cash flow generation.”
Synopsys, Inc. joins Texas Instruments Incorporated, Intel Corporation and Taiwan Semiconductor Manufacturing Company Limited as one of Man GLG’s top chip stock picks.
5. Cadence Design Systems, Inc. (NASDAQ:CDNS)
GLG’s Stake Value: $193 million
Percentage of GLG’s 13F Portfolio: 0.62%
Number of Hedge Fund Holders: 35
Cadence Design Systems, Inc. (NASDAQ:CDNS) is a software company that deals with the semiconductor sector. Its products are involved in early stage chip manufacturing before the circuits are printed by the fabrication companies onto silicon wafers. Cadence Design Systems, Inc.’s products allow the companies to verify the designs, create schematics, and analyze the effects of various forces on a chip.
Man GLG had a $193 million stake in Cadence Design Systems, Inc. by the end of Q4 2021. This came through one million shares, and it represented 0.62% of the firm’s investment portfolio. During the same time period, 35 of the 924 edge funds profiled by Insider Monkey also held shares of the software company.
Cadence Design Systems, Inc. brought in $773 million in revenue and $0.82 in non-GAAP EPS during its fiscal fourth quarter, beating analyst estimates for both. KeyBanc raised the company’s price target to $445 from $395 in January 2022, highlighting that the electronic design automation (EDA) industry is set for strong growth.
Cadence Design Systems, Inc.’s largest investor is Panayotis Takis Sparaggis’ Alkeon Capital Management. It owns 4.3 million shares for an $802 million stake.
4. NVIDIA Corporation (NASDAQ:NVDA)
GLG’s Stake Value: $239 million
Percentage of GLG’s 13F Portfolio: 0.77%
Number of Hedge Fund Holders: 111
NVIDIA Corporation (NASDAQ:NVDA) is an American semiconductor design company that develops and sells chips known as graphics processing units (GPUs). Its products are also assembled by third party board manufacturers for the general consumer, and NVIDIA Corporation is also known for its products targeting the corporate datacenter market.
As its fourth fiscal quarter came to an end, NVIDIA Corporation had earned $7.6 billion in revenue and $1.32 in non-GAAP EPS, beating analyst estimates for both metrics. The company is developing new products, such as DPUs, as part of its bid to target the rapidly growing data center market and compete with CPU platforms. Investment bank Goldman Sachs resumed coverage of NVIDIA Corporation’s shares in March 2022, stating that it views the company as an industry leader.
By the end of the fourth quarter of last year, Man GLG had a $239 million stake in NVIDIA Corporation. It owned 814,574 shares of the company, and the stake represented 0.77% of its portfolio. 111 of the 924 hedge funds polled by Insider Monkey during the same time period also owned the company’s shares.
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.”
Ken Fisher’s Fisher Asset Management is NVIDIA Corporation’s largest investor. It owns a $1.5 billion stake that comes through 5.1 million shares.
3. Texas Instruments Incorporated (NASDAQ:TXN)
GLG’s Stake Value: $280 million
Percentage of GLG’s 13F Portfolio: 0.9%
Number of Hedge Fund Holders: 57
Texas Instruments Incorporated is a semiconductor designer and manufacturer that deals with other companies. Its products are used in gadgets and devices to manage power consumption, regulate and monitor voltage, and measure and convert signals.
Texas Instruments Incorporated reported $4.8 billion revenue and $2.27 GAAP EPS for its fiscal Q4, pleasing Wall Street by exceeding estimates for both. In January 2022, the company announced a new amplifier that is capable of operating at high frequencies to support a large variety of gadgets.
Man GLG’s stake in the company by the end of Q4 2021 equaled $280 million, through owning 1.4 million shares. Insider Monkey’s survey of 924 hedge funds during the same time revealed that 57 had owned a stake in the company.
Texas Instruments Incorporated’s largest investor is Jean-Marie Eveillard’s First Eagle Investment Management which owns 3.3 million shares worth $625 million.
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.”
2. Intel Corporation (NASDAQ:INTC)
GLG’s Stake Value: $290 million
Percentage of GLG’s 13F Portfolio: 0.93%
Number of Hedge Fund Holders: 74
Intel Corporation is one of the oldest semiconductor firms in the world. The company is primarily known for selling central processing units (CPUs) to both the general public and corporate users. Intel Corporation has pioneered countless different processor lineups, iterating its design to improve performance in each generation.
Mr. Gottesman’s former investment firm owned 5.6 million Intel Corporation shares during the fourth quarter of last year. This enabled it to own a $290 million stake constituting 0.93% of its portfolio. At the same time, 74 of the 924 hedge funds polled by Insider Monkey had also owned the company’s shares.
Intel Corporation brought in $19.5 billion in revenue and $1.09 in non-GAAP EPS during its fiscal Q4, enabling it to beat analyst estimates for both. In the wake of the ongoing war in the Eastern European nation of Ukraine, the company became one of the first Western technology firms to halt its sales in Russia, in the wake of U.S. government sanctions.
Intel Corporation’s largest investor is Seth Klarman’s Baupost Group. It owns 18 million shares and has a stake of $928 million.
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 AMD, Nvidia, Apple, and, most recently, Micron’s stellar Chief Financial Officer, David Zinsner.
We are encouraged by Intel’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’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.”
1. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
GLG’s Stake Value: $499 million
Percentage of GLG’s 13F Portfolio: 1.6%
Number of Hedge Fund Holders: 75
Taiwan Semiconductor Manufacturing Company Limited is a contract chip manufacturer based out of Taiwan. The company manufactures chips for other companies, such as the Cupertino, California consumer electronics giant Apple, Inc. (NASDAQ:AAPL) and Advanced Micro Devices, Inc. (NASDAQ:AMD).
The Taiwan Semiconductor Manufacturing Company Limited earned $15.7 billion in revenue and $1.15 in GAAP EPS for its fourth fiscal quarter, surpassing Wall Street analyst expectations and beating them for both. The company is currently developing its latest 3-nanometer (nm) chip manufacturing technology, and it expects to start 3nm production later this year, placing it at the forefront of the chip fabrication industry.
GLG had owned 4.1 million Taiwan Semiconductor Manufacturing Company Limited shares during Q4 2021, which translated into a $499 million stake representing 1.6% of its portfolio. An Insider Monkey poll during the same time period revealed that 75 out of 924 funds had also owned the company’s shares.
Ken Fisher’s Fisher Asset Management is the Taiwan Semiconductor Manufacturing Company Limited’s largest investor through a $3.1 billion stake by owning 25.9 million shares.
L1 Capital mentioned the Taiwan Semiconductor Manufacturing Company Limited in its third quarter 2021 investor letter, as it outlined that:
“Even though they are not majority State owned and we would expect many of China’s technology champions to continue to grow strongly, outcomes for shareholders may be unsatisfactory… The Fund has retained its investment in Taiwan Semiconductor Manufacturing Company (TSMC) which is well placed to maintain its global leadership in semiconductor manufacturing. Due to geopolitical risks, we limit the position size of TSMC in the Fund.”
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originally published on Insider Monkey.
