3. Micron Technology, Inc. (NASDAQ:MU)
Tiger Management’s Stake Value: $34,762,000
Percentage of Tiger Management’s 13F Portfolio: 5.73%
Number of Hedge Fund Holders: 78
Micron Technology, Inc. (NASDAQ:MU) is a leading semiconductors company that designs, manufactures, and sells memory and storage products worldwide. As of March 31, Tiger Management owns over 0.44 million shares of Micron Technology, Inc. (NASDAQ:MU) which brings the fund’s stakes in the company to $34.76 million. The stock is ranked fourth among the top 10 holdings of Tiger Management and covers 5.73% of its investment portfolio.
Wall Street analysts are bullish on the semiconductor sector and Micron Technology, Inc. (NASDAQ:MU). This May, Citi analyst Christopher Danely reiterated a Buy rating on Micron Technology with a $120 price target.
By the end of the first quarter of 2022, 78 hedge funds held stakes in Micron Technology, Inc. (NASDAQ:MU) worth $3.42 billion.
Hazelton Capital Partners, an investment management firm, mentioned some companies in its third-quarter 2021 investor letter, and Micron Technology, Inc. (NASDAQ:MU) was one of them. Here is Hazelton Capital’s take on the stock:
“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.”
