Headwaters Capital Management, an investment management company, released its second-quarter 2024 investor letter. A copy of the letter can be downloaded here. It was a calm period for the market compared to the last three years. The fund returned +1.3% (+1.1% net) in the second quarter compared to a -3.4% fall for the Russell Mid Cap Index. The company focuses on investing in companies with a competitive edge, strong cash flow, and extended growth prospects. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.
Headwaters Capital Management highlighted stocks like PDF Solutions, Inc. (NASDAQ:PDFS) in the Q2 2024 investor letter. PDF Solutions, Inc. (NASDAQ:PDFS) offers proprietary software and physical intellectual property products. The one-month return of PDF Solutions, Inc. (NASDAQ:PDFS) was 11.83%, and its shares lost 17.32% of their value over the last 52 weeks. On July 12, 2024, PDF Solutions, Inc. (NASDAQ:PDFS) stock closed at $37.61 per share with a market capitalization of $1.444 billion.
Headwaters Capital Management stated the following regarding PDF Solutions, Inc. (NASDAQ:PDFS) in its Q2 2024 investor letter:
“PDF Solutions, Inc. (NASDAQ:PDFS): They Didn’t Invent the Chicken (Electrical Characterization), Just the Chicken Sandwich (the Electrical Characterization Product)
Summary Thesis: 1. Industry Leader in Semiconductor Yield and Process Automation Software 2. Technology at the Intersection of Multiple Secular Growth Themes, Driving Accelerating Revenue Growth 3. Completion of Business Model Transition Results in More Durable Revenue and Improved Profit Margins 4. Call Option on Unique, Emerging Technology That is Showing Early Signs of Commercial Traction 5. Founder Led Business with 10% Insider Ownership Aligns Management with Shareholders
Company Overview & History: PDF Solutions, headquartered in Santa Clara, CA, is a leading provider of software, hardware and professional services solutions that help customers optimize Process, Design and Fabrication (hence the PDF name). More specifically, PDF collects and analyzes data that helps customers lower the total cost of semiconductor design and manufacturing, accelerate time to market, and improve overall product quality and reliability. The company was co-founded in 1991 by current CEO, John Kibarian, and VP of Products and Services, Kimon Michaels upon completion of their PHDs at Carnegie Mellon. From the beginning, the company has relied on its expertise in electrical characterization to improve manufacturing yields for customers. Today, the company employs over 300 PHDs and has a customer base that spans the entire semiconductor value chain (fabs, fabless, IDMs, OSATs and tools companies). As Dr. Michaels noted at the Company’s 2016 Analyst Day, PDF “didn’t invent test chips… didn’t invent parametric testers, yet PDF managed…to product-ize electrical characterization…” (Click here to read the full text)
A Software-as-a-Service interface illustrating the interconnectivity of users and the internet.
PDF Solutions, Inc. (NASDAQ:PDFS) is not on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 21 hedge fund portfolios held PDF Solutions, Inc. (NASDAQ:PDFS) at the end of the first quarter which was 22 in the previous quarter. The first quarter revenue of PDF Solutions, Inc. (NASDAQ:PDFS) for the first quarter of 2024 was$41.3 million increased slightly from Q1 2023 and Q4 2023. While we acknowledge the potential of PDF Solutions, Inc. (NASDAQ:PDFS) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we discussed PDF Solutions, Inc. (NASDAQ:PDFS) and shared NCG Micro-Cap Strategy’s views on the company in the previous quarter. In addition, please check out our hedge fund investor letters Q2 2024 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
