In this piece, we will take a look at the ten semiconductor stocks to buy today according to Israel Englander’s Millennium Management. If you want to skip our introduction about the hedge fund investor and his fund, then head on over to 5 Semiconductor Stocks to Buy Today According to Israel Englander’s Millennium Management.
Israel Englander is an American hedge fund investor who is responsible for the investment strategies of the hedge fund Millennium Management. Millennium Management is one of the largest hedge funds in the world, and it is based out of New York, New York, United States.
Mr. Englander created Millennium Management in 1989 along with his partner Mr. Ronald Shear. Prior to starting the multi billion dollar hedge fund, the executive started his investment journey at the firm Oppenheimer. Mr. Englander’s interest in the financial world began during his teenage years when he started trading stocks during high school. He has a bachelor’s degree in finance from New York University and worked at another Wall Street firm before beginning his journey at Millennium Management. Prior to Millennium, the executive also bought a seat on the New York Stock Exchange and also helped set up a hedge fund that was later dissolved due to reasons unrelated to Mr. Englander.
Millennium Management was set up with $35 million in capital, out of which $5 million was put up by Englander himself. The investment firm employs a host of investment strategies to generate returns. These include long/short trading, share price arbitrage of both merging companies, stock options and quantitative analysis. It also has a diverse employee structure, which consists of more than a hundred different teams headed by portfolio managers who have been allocated a chunk of funds from Millennium Management’s pool of funds.
These strategies have enabled the firm to grow from the $35 million in invested capital it had in 1989 to an eye-popping portfolio value of $196 billion by the end of the fourth quarter of last year. A cursory look at this portfolio reveals a combination of long/short investments alongside stakes in a variety of firms. Out of these, we will discuss Millennium Management’s top semiconductor picks in today’s piece. The top three among these are NVIDIA Corporation (NASDAQ:NVDA), Advanced Micro Devices, Inc. (NASDAQ:AMD), and Texas Instruments Incorporated (NASDAQ:TXN).
Israel Englander of Millennium Management
Our Methodology
In order to sift out Millennium Management’s top semiconductor stock picks, we scanned its Q4 2021 SEC filings with a fine toothed comb. This enabled us to identify the ten companies out of hundreds of positions, following which the chip firms were analyzed through their earnings reports, analyst coverage, investor letters, other large investors, and hedge fund sentiment generated through Insider Monkey’s survey of 924 funds for the fourth quarter of last year.
10 Semiconductor Stocks to Buy Today According to Israel Englander’s Millennium Management
10. Micron Technology, Inc. (NASDAQ:MU)
Millennium Management’s Stake Value: $77 million
Percentage of Millennium Management’s 13F Portfolio: 0.03%
Number of Hedge Fund Holders: 83
Micron Technology, Inc. (NASDAQ:MU) is one of the world’s largest semiconductor firms that targets the memory segment. The chip industry is divided into memory and non-memory segments, and the former consists of products such as random access memories (RAMs) that are used in a variety of markets that cover both personal and enterprise computing.
Mr. Englander’s hedge fund owned 827,243 Micron Technology, Inc. (NASDAQ:MU) shares by the end of Q4 2021. These were worth $77 million and represented 0.03% of its portfolio. An Insider Monkey survey targeting 924 hedge funds for the same time period revealed that 83 also had a stake in the company.
Micron Technology, Inc. (NASDAQ:MU) brought in $7.69 billion in revenue and $2.16 in non-GAAP EPS for its fiscal Q4. These let it beat analyst estimates for both and the investment firm Wedbush raised the company’s price target to $120 from $100 in February 2022. To justify its decision, the firm highlighted that the growth in the semiconductor sector will spell positive demand for the company. Micron Technology, Inc. (NASDAQ:MU) also introduced a new memory for the fast growing datacenter segment in March 2022.
Micron Technology, Inc. (NASDAQ:MU)’s largest investor is Paul Marshall and Ian Wace’s Marshall Wace LLP. It has a stake of $507 million through owning 5.4 million shares.
Hazelton Capital Partners mentioned Micron Technology, Inc. (NASDAQ:MU) 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.”
Advanced Micro Devices, Inc. (NASDAQ:AMD), NVIDIA Corporation (NASDAQ:NVDA), and Texas Instruments Incorporated (NASDAQ:TXN) are met by Micron Technology, Inc. (NASDAQ:MU) in the list of Millennium Management’s favorite chip stocks.
9. Lam Research Corporation (NASDAQ:LRCX)
Millennium Management’s Stake Value: $82 million
Percentage of Millennium Management’s 13F Portfolio: 0.04%
Number of Hedge Fund Holders: 63
Lam Research Corporation (NASDAQ:LRCX) is one of the few companies in the world that designs, manufactures, and sells equipment directly used in semiconductor fabrication. This makes it crucial to the segment, as it has a high demand and few competitors.
For its second fiscal quarter, Lam Research Corporation (NASDAQ:LRCX) earned $4.23 billion in revenue and $8.33 in non-GAAP EPS, beating analyst estimates for both. B. Riley lowered the company’s price target to $725 from $750 in January 2022, outlining that the company had provided disappointing earnings guidance but it has the mechanisms in place for recovery.
Millennium Management owned 114,080 Lam Research Corporation (NASDAQ:LRCX) shares as the fourth quarter of last year came to an end. These were worth $82 million and represented 0.04% of its investment portfolio. A Q4 2021 Insider Monkey survey of 924 hedge funds outlined that 63 had also owned the company’s shares.
Lam Research Corporation (NASDAQ:LRCX)’s largest investor is Ken Fisher’s Fisher Asset Management. It owns a $1.29 billion stake in the company through 1.8 million shares.
ClearBridge Investments mentioned Lam Research Corporation (NASDAQ:LRCX) in its third quarter 2021 investor letter, outlining that:
“It was a relatively quiet quarter in terms of portfolio changes, although we took advantage of very strong performance to exit semiconductor equipment manufacturer Lam Research. While Lam has extremely valuable technology and an exceptionally robust secular growth story, it is also highly cyclical, and we chose to exit our position after a period of extraordinary performance.”
8. Teledyne Technologies Incorporated (NYSE:TDY)
Millennium Management’s Stake Value: $85 million
Percentage of Millennium Management’s 13F Portfolio: 0.04%
Number of Hedge Fund Holders: 44
Teledyne Technologies Incorporated (NYSE:TDY) is an American company that provides x-ray and infra-red imaging systems to the semiconductor industry. These systems enable the company’s customers to inspect their wafers and masks for quality control purposes. In chip fabrication, a mask is a set of patterns that resemble the circuit layout on the final product, and a wafer is a piece of silicon on which these patterns are printed.
Mr. Englander’s Millennium Management had an $85 million stake in Teledyne Technologies Incorporated (NYSE:TDY) by the end of Q4 2021. This came through 195,065 shares and represented 0.04% of its investment portfolio. Insider Monkey’s poll of 924 hedge funds for the same time period revealed that 44 had also owned a stake in the company, which is an all time high since the start of 2013.
Teledyne Technologies Incorporated (NYSE:TDY) posted $1.38 billion in revenue and $4.56 in non-GAAP EPS for its fourth fiscal quarter in January 2022. This marked a whopping 70% annual revenue growth and let the company beat analyst estimates for both metrics. Morgan Stanley set a $450 price target for the company in December 2021, as it stated that the company has diversified its offerings and estimates have set a high bar that can fuel growth.
Teledyne Technologies Incorporated (NYSE:TDY)’s largest investor is Robert Joseph Caruso’s Select Equity Group which owns 2.2 million shares worth $994 million.
7. Teradyne, Inc. (NASDAQ:TER)
Millennium Management’s Stake Value: $87 million
Percentage of Millennium Management’s 13F Portfolio: 0.04%
Number of Hedge Fund Holders: 40
Teradyne, Inc. (NASDAQ:TER) is a testing equipment provider that allows semiconductor fabricators and assemblers to test their products for quality control. Its testing machines cover several industries such as smartphones, computers, industrial, and automotive.
As its fourth fiscal quarter came to an end, Teradyne, Inc. (NASDAQ:TER) earned $885 million in revenue and $1.37 in non-GAAP EPS, beating analyst estimates for both. The company is currently witnessing a pessimistic wave from investment banks, who believe that its next growth cycle will come next year due to a delay for the Cupertino technology giant Apple, Inc. (NASDAQ:AAPL).
Millennium Management owned an $87 million stake in Teradyne, Inc. (NASDAQ:TER) as Q4 2021 came to an end. This was through 534,575 shares and it represented 0.04% of the firm’s investment portfolio. During the same time period, 440 of the 924 hedge funds polled by Insider Monkey had also owned the company’s shares.
Panayotis Takis Sparaggis’ Alkeon Capital Management is Teradyne, Inc. (NASDAQ:TER)’s largest investor. It owns 3.7 million shares worth $611 million.
6. Broadcom Inc. (NASDAQ:AVGO)
Millennium Management’s Stake Value: $88 million
Percentage of Millennium Management’s 13F Portfolio: 0.04%
Number of Hedge Fund Holders: 67
Broadcom Inc. (NASDAQ:AVGO) is a communications system semiconductor provider that specializes in chips that enable a wide variety of gadgets to connect with each other. Its products are used in smartphones, wireless routers, and other technology devices.
Mr. Englander’s hedge fund owned 132,497 Broadcom Inc. (NASDAQ:AVGO) shares by the end of the fourth quarter of last year. These were worth $88 million and represented 0.04% of its portfolio. During the same time period, 67 of the 924 hedge funds part of an Insider Monkey poll held a stake in the company.
Broadcom Inc. (NASDAQ:AVGO) reported $7.7 billion in revenue and $8.39 in non-GAAP EPS for its fiscal Q1, pleasing Wall Street by beating analyst estimates for both. KeyBanc raised the company’s price target to $720 from $710 in March 2022, stating that the earnings results were strong and that future demand for cloud data centers will spell positively for the company.
William Von Mueffling’s Cantillon Capital Management is Broadcom Inc. (NASDAQ:AVGO)’s largest investor through a $699 million stake via one million shares.
Miller Howard Investments mentioned Broadcom Inc. (NASDAQ:AVGO) in its third quarter 2021 investor letter. Here is what the fund said:
“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.”
Broadcom Inc. (NASDAQ:AVGO) joins NVIDIA Corporation (NASDAQ:NVDA), Advanced Micro Devices, Inc. (NASDAQ:AMD), and Texas Instruments Incorporated (NASDAQ:TXN) as one of Mr. Englander’s top semiconductor stock picks.
Click to continue reading and see 5 Semiconductor Stocks to Buy Today According to Israel Englander’s Millenium Management.
Suggested articles:
- Jim Cramer Recommends Selling These 10 Stocks
- 11 Best Blue Chip Stocks To Buy Now
- 9 Dividend Stocks to Buy According to Billionaire Dan Loeb’s Third Point
Disclosure: None. 10 Semiconductor Stocks to Buy Today According to Israel Englander’s Millenium Management is originally published on Insider Monkey.
