Mott Capital Scores on Semiconductors, Calls Netflix/Comcast Deal “A Game Changer”

Mott Capital is a thematic growth investing fund. Its founder Michael Kramer has an extensive trading experience and looks at themes in society to find out equity investment ideas. The fund typically follows a long term approach towards investing with a 3-5 years’ time frame. Approximately 65% of the clients are high net worth individuals.

In a letter sent to investors for the third quarter of 2016, Mr. Kramer stated the stock market should rally in the fourth quarter, as he does not think that the central banks will raise rates given the low inflation and growth expectations. Given below are few of his top holdings, including Netflix Inc. (NASDAQ:NFLX) which was added to the fund’s portfolio during the quarter. The fund thinks that a Netflix-Comcast deal could be “a game changer” and is bullish on NXP Semiconductors. Michael is also upbeat about the prospects of HAIN Celestial Group Inc. (NASDAQ:HAIN) despite its poor performance in recent times.

At Insider Monkey, we track around 750 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see more details about our small-cap strategy).

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NXP Semiconductors NV (NASDAQ:NXPI) is a semiconductor holding company catering to the needs of high-performance mixed-signal electronics. This company which has a presence in more than 35 countries, reported sales of $6 billion last year. The company provides innovative products for markets such as automobiles, cyber security, portables & wearables and the Internet of Things. For the second quarter of 2016, revenue increased sharply by 57% y/y to $2.37 billion. Reportedly, NXP Semiconductors is in talks to be acquired by San Diego based Qualcomm Inc. (NASDAQ:QCOM) for around $37 billion, but Mr. Kramer estimated that NXP could be valued at $40 billion or $120 per share. Due the rally on the back of a potential deal, NXP’s stock is up by more than 20% in the last three months and 16% year-to-date. NXP is also among the top performers in Mott Capital’s portfolio returning more than 30% in the third quarter. The number of funds tracked by Insider Monkey having a long position in this stock increased to 57 from 52 during the second quarter.