We recently published a list of Warren Buffett Disciple Guy Spier’s 10 High Conviction Stock Picks. In this article, we are going to take a look at where Micron Technology, Inc. (NASDAQ:MU) stands against Guy Spier’s other high conviction stock picks.
Guy Spier’s Aquamarine Capital Management is a Zurich, Switzerland-based investment manager that employs the same long-term oriented, value investment approach as Warren Buffett, who Mr. Spier proudly considers himself a disciple of.
Spier earned a degree in philosophy, politics, and economics from Oxford University in 1988 and followed that up with an MBA from Harvard Business School. Foollowing that, he spent several years working as a researcher and investor on Wall Street, including stints at Braxton Associates and Buffett’s Berkshire Hathaway, the latter of which inspired him to launch his own value investing fund in 1997.
Spier is noteworthy in the investment world for his $650,100 lunch (alongside Mohnish Pabrai) with Warren Buffett in 2007, which was purchased through a charity auction. Spier took several important lessons from that meeting, including the necessity of saying no, and ultimately wrote a book about his takeaways from that lunch and his broader investment journey entitled ‘The Education of a Value Investor: My Transformative Quest for Wealth, Wisdom, and Enlightenment’.
Mr. Spier makes all of his firm’s investment decisions himself and is an even more ardent value investor than Buffett, holding on to many of his positions for several years without touching them. In the second quarter the fund added two small new positions to its 13F portfolio while otherwise leaving the rest of it untouched. Its 13F portfolio held $263 million worth of assets on June 30, 74% of which were invested in finance stocks.
Aquamarine’s total return stands at 874% since inception through the end of 2023, or 9% annually, outperforming the S&P 500’s 717% returns during that period. Spier’s fund hasn’t been as successful in recent years however. It returned 18.7% last year, which underperformed the market, the sixth-straight year it’s failed to top the market. 2000, 2002, and 2006 were three of the fund’s strongest years, as it beat the market by more than 20%.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here). That’s why you should pay close attention to this important indicator.
A close-up view of a computer motherboard with integrated semiconductor chips.
Micron Technology, Inc. (NASDAQ:MU)
Value of Aquamarine Capital Management’s 13F Position (6/30/2024): $26.3 million
Number of Hedge Fund Shareholders (3/31/2024): 115
Micron Technology, Inc. (NASDAQ:MU) is a hot commodity among smart money investors right now, with their ownership of the memory and storage products company jumping by 24% in the first quarter to hit a 10-year high. Guy Spier’s been on the Micron bandwagon much longer, holding a 200,000-share position in the stock since the final quarter of 2020 (it held 120,000 shares for a year prior to that). Spier’s stake has risen from $15 million in value at the end of 2020 to $26.3 million at the end of June 2024.
Micron Technology, Inc. (NASDAQ:MU) is ramping up its production of high bandwidth memory (HBM) storage solutions, which are poised to inject a shot of margin and income upside into the company’s balance sheet, given they’re DRAM and gross margin accretive. Micron began to ship HBM products in greater numbers during its fiscal Q3, with over $100 million in sales. That figure is expected to push into the billions in FY2025, with the company having already sold out of its HBM stock through the end of the 2025 calendar year.
ClearBridge Value Equity Strategy pointed out some of Micron Technology, Inc. (NASDAQ:MU)’s biggest market opportunities in its Q2 2024 investor letter:
“Stock selection in the IT sector proved to be the largest contributor to performance, particularly driven by the strong performance of Micron Technology, Inc. (NASDAQ:MU) The company, which designs, develops, manufactures and sells memory and storage products, continued its strong performance alongside other AI beneficiaries as the anticipated demand for new and additional storage essential for housing and training large language AI models continues to grow.”
Overall, MU ranks 5th on our list of Guy Spier’s high conviction stock picks. While we acknowledge the potential of MU 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 more promising than MU but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.