Hazelton Capital Partners’ Top 2 Positions and One Stock It Sold Last Quarter

Micron Technology, Inc. (NASDAQ:MU) is the 3rd and 4th largest global manufacturer of DRAM memory and NAND flash storage, respectively. The company, like Western Digital Corp (NASDAQ:WDC) is well positioned to take advantage of growth in NAND memory. Though there is a risk of an unforeseen, rapid technology disruption to the digital storage industry, Micron Technology, Inc. (NASDAQ:MU) possesses a competitive advantage due to high capital requirements and intellectual property. Global producers have invested tens of billions on R&D and retooling production from 2D to 3D NAND. Even though 3D NAND has been in production for the past 18 months, profitability is only expected by the end of 2017. Hazelton Capital Partners thinks that Micron Technology, Inc. (NASDAQ:MU) is also well positioned to take advantage of the robust digital storage demand, as it can leverage its R&D and intellectual property to lower expenses and improve profitability.

On the other hand, Hazelton Capital Partners closed its position in FMC Corp (NYSE:FMC) with a 70% gain. The company is a diversified chemical manufacturer that operates in three business segments: Agricultural Solutions, Health and Nutrition and Lithium. In the second half of 2015, Hazelton Capital Partners started researching FMC Corp (NYSE:FMC), and in the third quarter it initiated a position in the stock. According to the fund’s managers, FMC Corp (NYSE:FMC) has a sound business and products, and even though a number of macro events were negatively impacting its revenues and profitability, it maintained a competitive edge in a very concentrated market. At the beginning of 2016, things began to improve as the company was able to meet its lowered earnings expectations. However, towards the end of the fourth quarter of 2016, Hazelton Capital Partners sold out its FMC position because even though fundamentals were improving with additional upside opportunity, there remained a large headwind impacting FMC and the rest of the industry. In 2016, global food prices hit their lowest levels since 2009, when the full impact of the financial crisis was felt by the economy. Lower demand led to lower price on agricultural products, price deflation in the grocery stores and lower crop acreage planted. This, in turn, will produce a slow price recovery for agricultural products and could very easily delay FMC’s revenue and margin recovery. Given the sharp increase in the stock price and the macro challenges facing the crop protection industry, Hazelton Capital Partners decided to close its FMC position.

Dsiclosure: None