In this article, we discuss 5 technology stocks to buy according to Kevin Mccarthy’s Breakline Capital. If you want to read our detailed analysis of Mccarthy’s history and hedge fund performance, go directly to 10 Technology Stocks to Buy According to Kevin Mccarthy’s Breakline Capital.
5. NXP Semiconductors N.V. (NASDAQ:NXPI)
Breakline Capital’s Stake Value: $5,816,000
Percentage of Breakline Capital’s 13F Portfolio: 7.84%
Number of Hedge Fund Holders: 44
NXP Semiconductors N.V. (NASDAQ:NXPI) is a holding company specializing in semiconductor solutions. By the end of the fourth quarter of 2021, Insider Monkey identified 44 hedge funds that had stakes in NXP Semiconductors N.V. (NASDAQ:NXPI). These holdings were worth a total of $907.09 million. Ken Fisher of Fisher Asset Management is the lead stakeholder in NXP Semiconductors N.V. (NASDAQ:NXPI). The fund owns 897,844 shares worth $204.51 million.
After NXP Semiconductors N.V. (NASDAQ:NXPI)’s Q4 earnings beat, Truist analyst William Stein boosted his price target to $265 from $250 and reiterated a Buy rating on the stock. In a research note to investors, the analyst observed that the business had a near-perfect quarter and its Q1 forecast was even better.
In the fourth quarter, Mccarthy cut his position in NXP Semiconductors N.V. (NASDAQ:NXPI) by 6,586 shares, reducing his total stake by 21%. Mccarthy first invested in NXP Semiconductors N.V. (NASDAQ:NXPI) in the fourth quarter of 2018. Kevin Mccarthy’s Breakline Capital still holds 25,533 shares of NXP Semiconductors N.V. (NASDAQ:NXPI), worth more than $5.82 million.
ClearBridge Investments in its Q3 2021 investor letter, mentioned NXP Semiconductors N.V. (NASDAQ:NXPI). Here is what the fund has to say:
“Over the last year, we have sought to improve the up capture of the portfolio by expanding exposure to the select bucket of companies growing revenues and earnings at meaningfully above-average rates and targeting large total addressable markets. Newer names in the select bucket like NXP Semiconductors N.V. (NASDAQ:NXPI) have been strong contributors to relative performance over this period. We believe that owning a broader group of IT and Internet companies with different drivers to the businesses helps manage some of the risk in this relatively more expensive subsector.”
4. Analog Devices, Inc. (NASDAQ:ADI)
Breakline Capital’s Stake Value: $6,221,000
Percentage of Breakline Capital’s 13F Portfolio: 8.38%
Number of Hedge Fund Holders: 72
Analog Devices, Inc. (NASDAQ:ADI) is a high-performance semiconductor firm that designs, develops, manufactures, and markets integrated circuits worldwide. Analog Devices, Inc. (NASDAQ:ADI) said on March 4 that it will invest EUR 100 million in ADI Catalyst, a 100,000-square-foot custom-built communication and collaboration centre at its Limerick, Ireland, headquarters over the next three years.
On February 17, Deutsche Bank analyst Ross Seymore cut his price target on Analog Devices, Inc. (NASDAQ:ADI) from $200 to $185 and maintained a Hold rating. In a research note to investors, Seymore stated that Analog Devices, Inc. (NASDAQ:ADI) had another solid quarter as demand rose sharply.
In Q4 2021, 72 hedge funds monitored by Insider Monkey were long Analog Devices, Inc. (NASDAQ:ADI), with stakes equalling $4.71 billion. Unio Capital is one of the prominent stakeholders of Analog Devices, Inc. (NASDAQ:ADI), owning 43,047 shares worth $804.76 million. In the fourth quarter, Breakline Capital increased its stake in Analog Devices, Inc. (NASDAQ:ADI) by 27%, and the hedge fund’s position in the company is now worth about $6.22 million.
In its third-quarter 2021 investor letter, Madison Funds mentioned Analog Devices, Inc. (NASDAQ:ADI). Here is what the fund said:
“At its 2017 investor day, Analog Device’s VP of Automotive, Mark Gill, described how the company’s content on well-equipped electric vehicles was $600 per car compared to $250 per car for the traditional 2017 internal combustion engine car. Since then, Analog has highlighted the success of its EV battery management systems (BMS) product nearly every quarter. The BMS product is hardware and software that manages the power into and out of the battery systems. It’s the brains of the operation. Analog says it’s on its fifth generation BMS product, that it has the no. 1 market share in high voltage products, and that it is on 5 of the top 10 selling EVs. While we think that the BMS product is just 1 to 1.5% of Analog’s product mix, we think that it could add nearly a point of revenue growth per year to the company’s top-line given the expected ramp in EV production. This is a material amount of growth atop an already nicely growing company revenue line.”
3. KLA Corporation (NASDAQ:KLAC)
Breakline Capital’s Stake Value: $7,210,000
Percentage of Breakline Capital’s 13F Portfolio: 9.72%
Number of Hedge Fund Holders: 49
KLA Corporation (NASDAQ:KLAC) provides semiconductor and related nano-electronics companies with process control and yield management solutions. A total of 49 hedge funds were bullish on KLA Corporation (NASDAQ:KLAC) in Q4 2021, up from 44 funds in the previous quarter. Alkeon Capital Management is the leading shareholder of KLA Corporation (NASDAQ:KLAC), with 1.69 million shares worth $726.43 million.
On March 18, KeyBanc analyst Steve Barger decreased his price objective on KLA Corporation (NASDAQ:KLAC) from $480 to $440 and maintained an Overweight rating on the stock. In a research note to investors, Barger adopted a cautious stance on the firm’s industrial and semi-cap equipment coverage, noting persistent uncertainty surrounding Russia’s invasion of Ukraine, further inflationary rises in commodities and energy costs, and COVID-related disruptions in Asia.
Breakline Capital also strengthened its position in KLA Corporation (NASDAQ:KLAC) by buying 3,725 additional shares. This makes their stake in KLA Corporation (NASDAQ:KLAC) total 16,764 shares worth $7.21 million.
Palm Capital mentioned KLA Corporation (NASDAQ:KLAC) in its Q2 2021 investor letter. Here is what the fund said:
“A final example of our thinking is in the semiconductor industry. Because of the extreme complexity and significant costs in the manufacturing process, the industry has become highly specialized. It has fragmented into three types of companies – the designers of chips, the manufacturers, and those that make equipment for the manufacturers.
Revenue for designers is somewhat stable because of patents. And even when patents expire, designs are not easily copied, and customers don’t easily switch because this would typically involve a redesign of their product and the risk that the new design does not work as well. However, revenue is still dependent on the length of the lifecycle of end products they are used for, how long it takes for those products to be replaced with new technology and the success of designers’ R&D into new designs. So, while near term revenue and profit margins are typically stable, medium to long term revenue and profits are uncertain. And the large customers in this industry such as Apple, Google and Amazon are all beginning to design their own chips, raising this uncertainty…
…On the other hand, revenue and profits for the companies that design and manufacture equipment for the manufacturers are steadier. An example of a company we like in this space is KLA. KLA provides tools and solutions to help manufacturers monitor and improve their highly complex manufacturing process and reduce costs. These are critical services to the manufacturers. Their tools are found in every major manufacturer globally. And the uniqueness of these tools is evidenced by KLA’s market share which is more than four times its nearest competitor. Regardless of which design is successful in the future or which manufacturer manages to take the lead, KLA’s tools will almost certainly still be needed. Its revenues and profits are less affected by technological change and therefore less uncertain than that of the designers and manufacturers.”
2. Microsoft Corporation (NASDAQ:MSFT)
Breakline Capital’s Stake Value: $7,496,000
Percentage of Breakline Capital’s 13F Portfolio: 10.1%
Number of Hedge Fund Holders: 262
Microsoft Corporation (NASDAQ:MSFT) is a tech mammoth developing and supporting software, services, devices, and solutions. Morgan Stanley analyst Keith Weiss kept an Overweight rating on Microsoft Corporation (NASDAQ:MSFT) shares with a $372 price target on February 8.
The hedge fund of Kevin Mccarthy entered the fourth quarter of 2021 with 22,289 shares of Microsoft Corporation (NASDAQ:MSFT) in its portfolio worth around $7.50 million. Microsoft Corporation (NASDAQ:MSFT) has featured on Mccarthy’s portfolio since the fourth quarter of 2017.
Out of the 924 elite hedge funds tracked by Insider Monkey in the fourth quarter of 2021, 262 hedge funds were bullish on the Microsoft Corporation (NASDAQ:MSFT) shares, with total stakes worth $75.66 billion. This shows hedge fund sentiment increased for Microsoft Corporation (NASDAQ:MSFT) in the fourth quarter over the previous quarter, where 250 hedge funds held stakes in the company.
Baron Funds, in its fourth quarter 2021 investor letter mentioned Microsoft Corporation (NASDAQ:MSFT). Here is what the fund has to say:
“Shares of Microsoft Corporation, a cloud-software leader and provider of software productivity tools and infrastructure, rose during the quarter, following a strong earnings report highlighting solid demand for its broad product stack and continued momentum migrating its business to the cloud. Microsoft’s results continued to be strong across the board, with total revenue growing 20% in constant currency, beating Street estimates by 3%; an acceleration in Commercial Cloud revenue to 34% constant-currency growth; operating margins expanding to just under 45%; earnings growth of 23%; and free cash flow growth of 30%. We believe the company is positioned to deliver 13% to 15% organic growth over the next three years, underpinned by total addressable market expansion and continued market share gains across its disruptive cloud product portfolio.”
1. Dell Technologies Inc. (NYSE:DELL)
Breakline Capital’s Stake Value: $9,808,000
Percentage of Breakline Capital’s 13F Portfolio: 13.22%
Number of Hedge Fund Holders: 62
Dell Technologies Inc. (NYSE:DELL) provides information technology hardware, software, and service solutions via its subsidiaries. Due to the recent market fall, Evercore ISI analyst Amit Daryanani upgraded Dell Technologies Inc. (NYSE:DELL) to Outperform from In-Line with a $60 price target on April 8.
Breakline Capital holds 174,620 shares in Dell Technologies Inc. (NYSE:DELL), worth $9.81 million. This represents 13.22% of its portfolio. The hedge fund’s stake in Dell Technologies Inc. (NYSE:DELL) increased by 84% in the fourth quarter of 2021.
In the fourth quarter of 2021, 62 hedge funds were bullish on Dell Technologies Inc. (NYSE:DELL), up from 60 funds in the quarter earlier. Paul Singer’s Elliott Management is one of the most significant Dell Technologies Inc. (NYSE:DELL) stakeholders, with over 9.48 million shares worth $532.71 million.
Third Point Management mentioned Dell Technologies Inc. (NYSE:DELL) in its third quarter 2021 investor letter. Here is what the fund said:
“Michael Dell has created substantial value for shareholders since re-listing the company several years ago. Earlier this year, Dell Technologies announced that it would be spinning its $50 billion stake in VMWare, which we believe will unlock the underappreciated value of the Dell server and PC businesses. Dell’s best attribute has been strong free cash flow generation, which the company has used to de-lever and create significant latent value for equity holders. Looking ahead, we believe this core Dell business, which still trades at a discount to its hardware peer group, should instead command a premium multiple thanks to its leading market share, profitability, and impressive execution. There are few large cap companies which possess a nearly 10% FCF yield, 2.5% dividend yield and 1.5x leverage ratio; Dell is one of them.”
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