In this article, we discuss the top 5 stock picks from the technology sector of Lee Munder’s hedge fund Lee Munder Capital Group (LMCG). If you are interested in knowing about the firm’s beginnings, its transformation and details about its current portfolio, please also check out 10 Best Tech Stocks to Buy Now According to Lee Munder’s Hedge Fund.
5. Applied Materials, Inc. (NASDAQ:AMAT)
Lee Munder Capital Group’s Stake Value: $15,415,000
Percentage of Lee Munder Capital Group’s 13F Portfolio: 1.06%
Number of Hedge Fund Holders(Q1): 74
Apart from Micron Technology, Inc. (NASDAQ:MU), Applied Materials, Inc. (NASDAQ:AMAT) was the only other semiconductor stock that made it to Lee Munder Capital Group’s top 10 stock picks at the end of June. Applied Materials, Inc. (NASDAQ:AMAT) popularity among smart money investors grew significantly from 2019 to 2021. At the end of 2021, 79 hedge funds tracked by us disclosed a stake in Applied Materials, Inc. (NASDAQ:AMAT), up 75% from 49 funds that reported a stake in the company at the end of 2018.
After President Biden signed the CHIPS Act into law on August 9, several semiconductor stocks, especially those with manufacturing facilities overseas, took a beating. This group included names like Nvidia (NASDAQ:NVDA), Micron Technology, Inc. (NASDAQ:MU) and Applied Materials, Inc. (NASDAQ:AMAT).
4. Amazon.com, Inc. (NASDAQ:AMZN)
Lee Munder Capital Group’s Stake Value: $38,866,000
Percentage of Lee Munder Capital Group’s 13F Portfolio: 2.67%
Number of Hedge Fund Holders(Q1): 271
Amazon.com, Inc. (NASDAQ:AMZN) was still the most popular stock at the end of Q1 among hedge funds we cover despite a decline in the number of hedge funds that disclosed holding a stake in the company to 271 from 279 at the end of 2021.
Earlier this week, LiveMint reported that the e-commerce giant is in advanced talks to acquire a 51% stake in India-based logistics solutions provider Ecom Express for between $500 million to $600 million valuing the latter at close to $1.2 billion. If the deal goes through, it will provide an exit to global private equity giant Warburg Pincus LLC which currently owns a 52.2% stake in Ecom Express.
On August 10, Amazon.com, Inc. (NASDAQ:AMZN) announced that it is expanding its palm-scanning technology, first introduced in 2020 as part of the Amazon One payment service, to 65 Whole Foods stores in California.
3. Alphabet Inc. (NASDAQ:GOOG)
Lee Munder Capital Group’s Stake Value: $51,697,000
Percentage of Lee Munder Capital Group’s 13F Portfolio: 3.55%
Number of Hedge Fund Holders Class A stock (Q1): 205
Number of Hedge Fund Holders Class C stock (Q1): 160
At the end of June, Lee Munder Capital Group (LMCG) held 137,720 Class C stock and 336,620 Class A stock of search giant Alphabet Inc. (NASDAQ:GOOG), with an aggregate value of $51.69 million, which made the company LMCG’s third favourite tech pick.
Bloomberg reported on August 10 that the US Justice Department is planning to sue Alphabet Inc. (NASDAQ:GOOG) as soon as next month on antitrust concerns over the company’s dominant position in the ad market. The Justice Department has already interviewed a few publishers and will interview more in the coming days to strengthen its case. This is not the first time the DOJ has sued Alphabet Inc. (NASDAQ:GOOG). In 2020, the regulator launched an antitrust investigation of the company’s online search market dominance.
2. Apple Inc. (NASDAQ:AAPL)
Lee Munder Capital Group’s Stake Value: $55,960,000
Percentage of Lee Munder Capital Group’s 13F Portfolio: 3.85%
Number of Hedge Fund Holders(Q1): 131
Despite being the world’s largest company by market cap, Apple Inc. (NASDAQ:AAPL) could only manage the 11th spot in our rankings of the most popular stock among smart money investors for Q1. Only 131 of the 912 hedge funds we track disclosed having a stake in the smartphone giant at the end of that period. The Oracle of Omaha’s Berkshire Hathaway held close to 900 million shares of Apple Inc. (NASDAQ:AAPL), worth over $155 billion, at the end of March, making it the largest shareholder of the company by a wide margin among funds tracked by us.
Ming-Chi Kuo, an analyst at TF International Securities, wrote a small Twitter thread on August 10 arguing that Apple Inc. (NASDAQ:AAPL) could raise the average selling price of its iPhone 14 series. Mr. Kuo tweeted:
Hon Hai/Foxconn is one of the winners of the increased ASP of iPhone 14 series. I estimated iPhone 14 series ASP would increase by about 15% (vs. iPhone 13 series ASP) to $1,000-1,050 (USD) due to two iPhone 14 Pro’s price hikes & higher shipment proportion.
Hon Hai is the major EMS for iPhone 14 series (with a 60-70% order proportion), so its revenue will markedly benefit from an increased iPhone 14 series ASP. No wonder Hon Hai raises full-year performance to “growing” from “roughly flat.”
1. Microsoft Corp. (NASDAQ:MSFT)
Lee Munder Capital Group’s Stake Value: $61,992,000
Percentage of Lee Munder Capital Group’s 13F Portfolio: 4.27%
Number of Hedge Fund Holders(Q1): 259
Microsoft Corp. (NASDAQ:MSFT) continued to remain Lee Munder Capital Group’s favourite technology stock and also its top stock pick at the end of the second quarter. Although Microsoft Corp.’s (NASDAQ:MSFT) stock might be trading lower by 18% from its lifetime high of $349.67 made last year, it still boasts of returning close to 900% gain to shareholders through price appreciation alone over the previous 10 years.
Several analysts covering Microsoft Corp. (NASDAQ:MSFT) have reduced their price target on the stock after the company reported its fiscal year 2022 fourth-quarter earnings on July 26. Despite that, 31 of the 32 analysts on Wall Street currently maintain a ‘Buy’ rating on the stock with a consensus price target of $335.72, representing a potential upside of 16.7% from the current stock price.
You can also look at Donald Yacktman’s Latest Portfolio: Top 10 Stock Picks and 10 Best Stocks to Buy According to Charles Paquelet’s Skylands Capital
