Is Applied Materials (AMAT) A Great Long-Term Investment?

Davis Funds, an investment management firm, published its “Davis Opportunity Fund” third quarter 2021 investor letter – a copy of which can be downloaded here. In the year-to-date period through July 31, Davis Opportunity Fund returned 23.32%, outperforming the S&P 1500 Index’s 18.07% return. You can take a look at the fund’s top 5 holdings to have an idea about their best picks for 2021.

Davis Opportunity Fund, in its Q3 2021 investor letter, mentioned Applied Materials, Inc. (NASDAQ: AMAT) and discussed its stance on the firm. Applied Materials, Inc. is a Santa Clara, California-based manufacturing company with a $132.2 billion market capitalization. AMAT delivered a 68.98% return since the beginning of the year, while its 12-month returns are up by 64.15%. The stock closed at $145.83 per share on December 03, 2021.

Here is what Davis Opportunity Fund has to say about Applied Materials, Inc.  in its Q3 2021 investor letter:

“Semiconductor-related holdings currently include Applied Materials. While each of these businesses is unique, they serve fast-expanding global end markets ranging from e-commerce and AI to cloud computing, mobile technologies and electric vehicles—a set of market opportunities that dwarf this industry’s historical legacy markets in more mature sectors, such as PCs and mobile devices. We are excited by these new, long-tailed areas of future growth for this set of well-resourced, innovative hightechnology companies. In our view, best-inclass operators have successfully made the transition from what were historically cyclical businesses to “growth cyclicals” over the coming decades. Products today are harder to design and manufacture, let alone source given a strained supply chain, making chips more valuable today than before—in some cases by multiples of past pricing. In addition, financially savvy managements have created value by retiring large percentages of their companies’ shares when their stocks were cheap, with some retiring 20–35% over the last seven years alone.”

Photo by Yogesh Phuyal on Unsplash

Based on our calculations, Applied Materials, Inc. (NASDAQ: AMAT) was not able to clinch a spot in our list of the 30 Most Popular Stocks Among Hedge Funds. AMAT was in 68 hedge fund portfolios at the end of the third quarter of 2021, compared to 73 funds in the previous quarter. Applied Materials, Inc. (NASDAQ: AMAT) delivered a 7.36% return in the past 3 months.

Disclosure: None. This article is originally published at Insider Monkey.