Ensemble Capital Management, an investment management company, released its third quarter 2023 investor letter. A copy of the same can be downloaded here. During the quarter, the strategy declined by 5.68% compared to the S&P 500’s 3.27% decline. The underperformance of the fund was driven by large declines in two holdings that have recently elected activist shareholders to their boards. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Ensemble Capital Management highlighted stocks like Texas Instruments Incorporated (NASDAQ:TXN) in the third quarter 2023 investor letter. Headquartered in Dallas, Texas, Texas Instruments Incorporated (NASDAQ:TXN) designs and manufactures semiconductors. On October 31, 2023, Texas Instruments Incorporated (NASDAQ:TXN) stock closed at $142.01 per share. One-month return of Texas Instruments Incorporated (NASDAQ:TXN) was -10.10%, and its shares lost 10.40% of their value over the last 52 weeks. Texas Instruments Incorporated (NASDAQ:TXN) has a market capitalization of $128.974 billion.
Ensemble Capital Management made the following comment about Texas Instruments Incorporated (NASDAQ:TXN) in its Q3 2023 investor letter:
“Companies like ADI and Texas Instruments Incorporated (NASDAQ:TXN) (which the industry refers to as TI), two of the largest analog companies, have built broad portfolios of tens of thousands of products, each with over a hundred thousand customers who make millions of products that sell billions of units. The product needs and lifecycles across all industries can vary from a year to decades, which is why ADI derives half of its revenue from products that are over ten years old! Historically, the prices of these chips have ranged from less than a dollar to a few dollars while volumes in the billions of chips result in $10-20 billion dollars of revenue for each of these companies at operating profit margins of 30-50%.
Once these chips are designed into customer products, it is generally uneconomical to switch them out for a competing chip because the average selling price is so low relative to reengineering costs, especially when you consider software that is built on top of the designed in hardware. This makes ADI’s products sticky once they are designed in, resulting in a competitive moat that spans across the scale of products and distribution, switching costs, and service capability…” (Click here to read the full text)
A lab technician inspecting intricate SEM micrographs of semiconductor interconnects.
Texas Instruments Incorporated (NASDAQ:TXN) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 56 hedge fund portfolios held Texas Instruments Incorporated (NASDAQ:TXN) at the end of second quarter which was 52 in the previous quarter.
We previously discussed Texas Instruments Incorporated (NASDAQ:TXN) in another article and shared the list of cash-rich dividend stocks to buy. In addition, please check out our hedge fund investor letters Q3 2023 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
