In this piece, we will take a look at the ten 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. 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. 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. also introduced a new memory for the fast growing datacenter segment in March 2022.
Micron Technology, Inc.’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. 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., NVIDIA Corporation, and Texas Instruments Incorporated are met by Micron Technology, Inc. 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 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 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’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 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 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 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’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. 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. 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.’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. 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. 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.’s largest investor through a $699 million stake via one million shares.
Miller Howard Investments mentioned Broadcom Inc. 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. joins NVIDIA Corporation, Advanced Micro Devices, Inc., and Texas Instruments Incorporated as one of Mr. Englander’s top semiconductor stock picks.
5. Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM)
Millennium Management’s Stake Value: $96 million
Percentage of Millennium Management’s 13F Portfolio: 0.04%
Number of Hedge Fund Holders: 75
Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is the world’s largest contract chip manufacturer which is responsible for servicing the chip needs of some of the world’s largest technology companies. It offers its customers the latest chip manufacturing technologies that are backed by its patented intellectual property.
Millennium Management owned a $96 million stake in the Taiwan Semiconductor Manufacturing Company Limited by the end of the fourth quarter of last year. This was through it owning 802,349 shares and it represented 0.04% of the multi billion dollar portfolio. During the same time period, 75 of the 924 hedge funds polled by Insider Monkey also held a stake in the company.
By the end of its fiscal Q4, the Taiwan Semiconductor Manufacturing Company Limited earned $15.7 billion in revenue and $1.15 in GAAP EPS, in a strong set of results that saw it beat analyst estimates for both. The company is currently expanding its chip production all over the globe by building new plants in the United States, European Union, and Japan.
The Taiwan Semiconductor Manufacturing Company Limited’s largest investor is Ken Fisher’s Fisher Asset Management. It owns a massive $3.1 billion stake via 25.9 million shares.
L1 Capital mentioned the Taiwan Semiconductor Manufacturing Company Limited in its third quarter 2021 investor letter. Here is what the fund said:
“Even though they are not majority State owned and we would expect many of China’s technology champions to continue to grow strongly, outcomes for shareholders may be unsatisfactory… The Fund has retained its investment in Taiwan Semiconductor Manufacturing Company (TSMC) which is well placed to maintain its global leadership in semiconductor manufacturing. Due to geopolitical risks, we limit the position size of TSMC in the Fund.”
4. Intel Corporation (NASDAQ:INTC)
Millennium Management’s Stake Value: $110 million
Percentage of Millennium Management’s 13F Portfolio: 0.05%
Number of Hedge Fund Holders: 74
Intel Corporation (NASDAQ:INTC) is widely heralded as the pioneer of the modern day microprocessor. The company became one of the first in the world to develop and sell what would become today’s integrated circuit processor. Over the years, Intel Corporation has successfully reduced its transistor sizes and improved performance.
Intel Corporation reported $19.5 billion in revenue and $1.09 in non-GAAP EPS for its fiscal Q4, beating analyst estimates for both. The company is currently racing to mass produce chips based on the latest manufacturing processes through its facilities located in the United States.
Mr. Englander’s hedge fund owned 2.1 million Intel Corporation shares during Q4 2021, in a $110 million stake which made up 0.05% of its investment portfolio. 74 of the 924 hedge funds polled by Insider Monkey during the same time period also held the company’s shares.
Seth Klarman’s Baupost Group is Intel Corporation’s largest investor according to Insider Monkey’s research. It owns 18 million shares for a $928 million stake.
Third Point Management mentioned Intel Corporation in its fourth quarter 2021 investor letter. Here is what the fund said:
“2021 was a highly productive year for Intel‘s new CEO, Pat Gelsinger. Despite the stock’s tepid results, we see a compelling, underappreciated fundamental story. Intel’s “brain drain” – a key part of our thesis when we first sought to help the company confront its long-time underperformance – appears to be reversing. Since joining Intel, Mr. Gelsinger has not only brought back prominent Intel former employees but has also attracted talents from competitors such as Advanced Micro Devices, Inc., Nvidia, Apple, and, most recently, Micron’s stellar Chief Financial Officer, David Zinsner.
We are encouraged by Intel Corporation’s aggressive investment plan, including a recently announced fabrication plant in Ohio and acquisition of Tower Semiconductors. We knew from the start that Intel’s turnaround would be complex and lengthy, and we have been pleased to see Mr. Gelsinger sacrifice near-term earnings for long-term growth.
Finally, after a series of blunders across its PC and Server product lines, Intel is finally receiving good reviews for one of its upcoming processors: Alder Lake. Tom’s Hardware, a preeminent hardware publication, called Alder Lake “a cataclysmic shift in Intel Corporation’s battle against AMD’s potent Ryzen 5000 chips.” While this is just one product across a broad lineup, and given it will take time to achieve leadership across them all, we are encouraged by these tangible signs of progress under Mr. Gelsinger’s leadership. With talent returning, an improving product suite, and a willingness to invest for growth, we believe Intel’s prospects have turned the corner. We expect that the company’s upcoming analyst day will be an ideal time for Mr. Gelsinger to articulate the progress he has made and begin to reset expectations for the company.”
3. Texas Instruments Incorporated (NASDAQ:TXN)
Millennium Management’s Stake Value: $152 million
Percentage of Millennium Management’s 13F Portfolio: 0.07%
Number of Hedge Fund Holders: 57
Texas Instruments Incorporated is an American semiconductor firm that offers several kinds of products. These include power controllers and signals processors, which are used in an assortment of technology gadgets.
Millennium Management owned 810,056 Texas Instruments Incorporated shares by the end of last year’s fourth quarter. These were worth $152 million, and the stake represented 0.07% of the firm’s investment portfolio. Insider Monkey’s research covering 924 hedge funds for the same time period revealed that 57 had also owned the company’s shares.
As its fiscal Q4 came to an end, Texas Instruments Incorporated brought in $4.8 billion in revenue and $2.27 in GAAP EPS, pleasing Wall Street and beating analyst estimates for both.
Texas Instruments Incorporated’s largest investor is Jean-Marie Eveillard’s First Eagle Investment Management. It has a $625 million stake via 3.3 million shares.
Distillate Capital mentioned Texas Instruments Incorporated in its third quarter 2021 investor letter. Here is what the fund said:
“The largest exited positions were Oracle, which outperformed significantly, and Texas Instruments and Honeywell, which were roughly flat versus the market in the quarter but were edged out for inclusion by other stocks that became even more attractively valued.”
2. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Millennium Management’s Stake Value: $251 million
Percentage of Millennium Management’s 13F Portfolio: 0.12%
Number of Hedge Fund Holders: 70
Advanced Micro Devices, Inc. is an American semiconductor designer which targets the personal computing and enterprise computing markets through its products. Additionally, the company also sells custom processors. Its products include central processing units (CPUs), graphics processing units (GPUs), and systems on chips (SoCs).
Advanced Micro Devices, Inc. posted $4.83 billion in revenue and $0.92 in non-GAAP EPS for its fiscal fourth quarter, showing strong growth and beating analyst estimates. Research firm Bernstein upgraded the company’s price target to $150 in February 2022, outlining that Advanced Micro Devices, Inc. has performed remarkably well over the years.
Millennium Management owned 1.7 million Advanced Micro Devices, Inc. shares during Q4 2021, for a $251 million stake that represented 0.12% of its portfolio. During the same time period, 70 out of the 924 hedge funds polled by Insider Monkey had also held a stake in the company.
Advanced Micro Devices, Inc.’s largest investor is Ken Fisher’s Fisher Asset Management which owns 19.9 million shares worth $2.8 billion.
Carillon Tower Advisers mentioned Advanced Micro Devices, Inc. in its Q4 2021 investor letter and stated that:
“Advanced Micro Devices (AMD) supplies semiconductor chips for central processing units (CPUs) and graphic processing units (GPUs). The firm has been gaining share against its primary competitor in the datacenter server CPU space, as this rival has been unable to match the design and manufacturing capabilities of AMD and its partners. Investors are also looking forward to the closing of the previously announced merger with a semiconductor manufacturer that is another one of the portfolio’s holdings. The merger will increase AMD’s capabilities in the Field Programmable Gate Array (FPGA) chip space, and the combined company should possess the potential to win additional market share in the datacenter chip market.”
1. NVIDIA Corporation (NASDAQ:NVDA)
Millennium Management’s Stake Value: $1.1 billion
Percentage of Millennium Management’s 13F Portfolio: 0.58%
Number of Hedge Fund Holders: 111
NVIDIA Corporation is one of the largest semiconductor firms in the world when it comes to market capitalization. The company has seen significant investor interest of late due to its successful targeting of growing markets. NVIDIA Corporation designs and sells graphics processing units (GPUs) that are used by general and enterprise users and it is also working on central processing units (CPUs).
NVIDIA Corporation raked in $7.6 billion in revenue and $1.32 in non-GAAP EPS for its fiscal fourth quarter, allowing it to beat analyst estimates for both. Its price target was set to $245 by Goldman Sachs in March 2022, with the bank stating that artificial intelligence and machine learning present strong growth opportunities for the company.
Mr. Englander’s hedge fund had a $1.1 billion stake in NVIDIA Corporation as the fourth quarter of last year came to an end. This came through 3.8 million shares and it represented 0.58% of the firm’s investment portfolio. A Q4 2021 Insider Monkey poll of 924 hedge funds showed that 111 had also owned the company’s shares.
Ken Fisher’s Fisher Asset Management is NVIDIA Corporation’s largest investor. It owns a $1.5 billion stake via 5.1 million shares.
In a third quarter 20221 investor letter, Harding Loevner mentioned NVIDIA Corporation and outlined:
“The proliferation of devices using chips, whether EVs, “things” in lol, or embedded systems more generally, results in the generation of oceans of data potentially needing to be stored, processed, and analyzed. NVIDIA, the leading chip designer wellknown for its graphic processing units and its complementary CUDA software ecosystem, is at the forefront of the effort to provide the analytical platform needed to unlock the full potential of such specialist processors.”
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This article is originally published at Insider Monkey.
