Below we present the list of top 5 stocks billionaire Mets owner Steve Cohen just added to his portfolio. For some background info on Cohen and his investment philosophy, as well as a look at some of his other new stock picks, please see Top 10 Stocks Billionaire Mets Owner Steve Cohen Just Added to His Portfolio.
5. Lam Research Corporation (NASDAQ:LRCX)
Value of Point72 Asset Management‘s 13F Position: $109 million
Number of Hedge Fund Shareholders: 63
Steve Cohen’s Point72 Asset Management bought a net total of 151,100 shares of Lam Research Corporation (NASDAQ:LRCX) during Q4, ending the period with a position valued at nearly $109 million. Varenne Capital Partners also took a bullish stake in LCRX during the quarter, with 15.32% of its 13F assets invested in the semiconductor equipment manufacturer.
Lam Research Corporation (NASDAQ:LRCX) shares have skyrocketed by more than 300% since the end of 2018, when the latest semiconductor downturn came to an end. Surprisingly, shares are down by 24% this year even in the midst of notable semiconductor shortages. The company has been dinged partly due to supply chain issues that are largely out of its control, which caused it to miss the midpoint of its guidance ranges with its fiscal Q2 2022 results. Even then, revenue grew by 22% year-over-year and adjusted earnings jumped by 41%.
Here is what Vulcan Value Partners Large Cap Fund had to say about Lam Research Corporation (NASDAQ:LRCX) in its Q4 2021 investor letter:
“Lam Research Corp. was a material contributor during the quarter. The company designs and manufactures equipment used in the fabrication of semiconductors. Consolidation and key shifts within the industry have improved the company’s competitive position in the industry and are driving demand for more complex capital equipment. The company’s near-term outlook improved during the quarter as customers announced plans to increase capital spending.”
4. Applied Materials, Inc. (NASDAQ:AMAT)
Value of Point72 Asset Management‘s 13F Position: $116 million
Number of Hedge Fund Shareholders: 79
Cohen is clearly big on semiconductor equipment manufacturers right now, as he also took a large stake in Applied Materials, Inc. (NASDAQ:AMAT) during Q4, buying 739,097 shares. There was a 16% jump in hedge fund ownership of AMAT during the quarter.
Applied Materials, Inc. (NASDAQ:AMAT) achieved very similar growth results as Lam Research during its latest quarter, which represented Q1 of the company’s fiscal year 2022. Applied Materials grew revenue by 21% year-over-year to $6.27 billion, while adjusted earnings jumped by 36% to $1.89 per share. Unlike Lam Research, Applied Materials actually beat estimates and delivered results closer to the higher end of its guidance range, yet it too suffered an investor pullback following the quarterly results. AMAT shares are down by 16% so far in 2022.
Here is what Davis Opportunity Fund had to say about Applied Materials, Inc. (NASDAQ:AMAT) and tech stocks in general in its Q4 2021 investor letter:
“Within technology and communication services, we own a number of online businesses and semiconductor related companies, including Alphabet, Amazon, Intel, Applied Materials and Texas Instruments. Within the realm of high technology, we believe that leadership positions reflect enduring and widening competitive advantages over smaller competitors, with few exceptions. This is because online businesses, as well as semiconductor companies, benefit from economies of scale. An online search and advertising engine will, in general, be more profitable per unit of cost as it grows larger in terms of users and advertising dollars. It is a hub-and-spoke model, in other words, where it is generally not necessary to grow expenses at the same rate that revenues grow beyond a certain threshold. Therefore, returns on capital tend to be higher, the larger and more dominant the online search company is.”
3. Atlassian Corporation Plc (NASDAQ:TEAM)
Value of Point72 Asset Management‘s 13F Position: $124 million
Number of Hedge Fund Shareholders: 70
Point72 bought up 325,579 shares of Atlassian Corporation Plc (NASDAQ:TEAM) during Q4, one of a net total of nine money managers that added TEAM to their 13F portfolios during the quarter. Catherine D. Wood’s ARK Investment Management and Steven Boyd’s Armistice Capital also took new stakes in the project management software maker.
Atlassian Corporation Plc (NASDAQ:TEAM) grew its revenue by 37% during its Q2 of fiscal 2022, while its cloud services performed even better, growing sales by 58%. Atlassian is also in the process of redomiciling its parent company to the U.S which it expects to derive several benefits from, including more favorable tax rates, improved access to capital, and inclusion is more indices. The move is expected to be completed during the first half of the company’s fiscal 2023.
While Cohen was buying, Tao Value was trimming its stake in Atlassian Corporation Plc (NASDAQ:TEAM) due to what it perceived to be a high valuation. Here is what the fund had to say about its ownership of the company in its Q4 2021 investor letter:
“We have no new position this quarter and have made below changes to our portfolio. We trimmed Atlassian (TEAM) for the first time since our initial purchase, for its high valuation as well as to control its relative size.”
2. The Coca-Cola Company (NYSE:KO)
Value of Point72 Asset Management‘s 13F Position: $167 million
Number of Hedge Fund Shareholders: 72
Hedge fund ownership of The Coca-Cola Company (NYSE:KO) jumped by 13% during Q4, hitting a 9-year high. Cohen was one of the prominent money managers to take a stake in the beverage giant, buying more than 2.82 million shares.
The Coca-Cola Company (NYSE:KO) shares have been on an upward trend since the low point of the pandemic in March 2020, gaining over 60% in the two years since. That’s not entirely surprising given that Coca-Cola has already surpassed its pre-pandemic revenue and income levels. The company’s revenue came in at $38.7 billion last year, a 3.7% increase compared to 2019.
The Coca-Cola Company (NYSE:KO) also recently joined the short list of dividend kings that can boast not just 50, but 60 straight years of annual dividend increases. Coca-Cola’s quarterly dividend of $0.44 equates to a solid annual yield of 2.84% on its shares. Cola-Cola’s dividend should be very safe for the foreseeable future, with a payout ratio of just over 70% in 2021 and the company’s net debt-to-EBITDA ratio expected to fall below 2x by 2024.
1. Micron Technology, Inc. (NASDAQ:MU)
Value of Point72 Asset Management‘s 13F Position: $206 million
Number of Hedge Fund Shareholders: 83
Topping the list of Steve Cohen’s newest buys is Micron Technology, Inc. (NASDAQ:MU), another big player in the semiconductor space. Cohen was one of several money managers to add MU to their portfolios in Q4, as there was a 28% increase in hedge fund ownership of the stock. Micron nonetheless remains less popular among hedge funds than it has at various points over the past decade, most notable around 2014-2015.
Micron Technology, Inc. (NASDAQ:MU) shares are down by over 16% in 2022, paring back some of the hefty 46% gains they enjoyed from mid-October to mid-January. Regardless, they’re still down by nearly 16% over the last year, struggling to woo investors even amid a global chip shortage.
Hazelton Capital Partners found that curious earlier this year before Micron’s big Q4, having this to say about Micron Technology, Inc. (NASDAQ:MU) in its Q3 2021 investor letter:
“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.”
For a look at several compelling cheap stocks that could make a good addition to any portfolio, check out 10 Cheap Dividend Stocks to Buy Today and These 10 Penny Stocks are Trending on Reddit.
