Top 5 Stocks to Invest in According to Alan Fournier’s Pennant Capital

2. Micron Technology, Inc. (NASDAQ:MU)

Mr. Fournier’s Stake Value: $46.2 million

Percentage of  Pennant Capital’s 13F Portfolio: 13.1%

Number of Hedge Fund Holders: 87

Micron Technology, Inc. (NASDAQ:MU) is an American computing firm that sells its memory and storage products for different computing devices all over the world. It was founded in 1978 in an era of growing semiconductor firms in the U.S. and it is headquartered in Boise, Idaho.

Mr. Fournier’s Pennant Capital Management held 651,400 Micron Technology, Inc. (NASDAQ:MU)  shares by the end of this year’s third quarter. These were worth $46.2 million and represented 13.1% of the firm’s portfolio. Micron Technology, Inc. (NASDAQ:MU) reported $8.2 billion in revenue and a non-GAAP EPS of $2.42 for its fourth fiscal quarter, beating analyst estimates on both counts.

Investment bank Goldman Sachs lowered Micron Technology, Inc. (NASDAQ:MU) price target to $88 in October 2021, citing demand and product uncertainty. Out of the 873 hedge funds surveyed by Insider Monkey for the second quarter, 87 had held a stake in Micron Technology, Inc. (NASDAQ:MU).

In its first quarter 2021 investor letter, Bonsai Partners mentioned Micron Technology, Inc. (NASDAQ:MU) and said that:

“Micron is a manufacturer of memory semiconductor chips. Micron appreciated 17.3% during the quarter.

With the semiconductor cycle in full swing, sentiment continued to improve for major DRAM and NAND suppliers. Spot pricing for DRAM continues its upward march due to supply shocks across the industry and sustained demand levels that continue to outstrip supply.

As a result, Micron showed improving results for the fiscal first quarter, raised guidance intra-quarter for the fiscal second quarter, and offered strong guidance for the fiscal third quarter in both growth and margins.

While the cyclical nature of DRAM hasn’t changed, the cycles themselves continue to become more benign, leading to long-term economic improvement across these businesses. Micron is now continuously profitable, with industry players in a dramatically stronger position than even just five years ago.

The biggest negative surprise in the quarter came from Micron’s exit from its 3D XPoint hybrid memory business. The company also announced its decision to sell its accompanying Utah fab. Fortunately, this development does not alter the investment thesis much since 3D XPoint was an option ticket for future growth. While it’s unfortunate this product didn’t pan out, now is an excellent time to sell a fab, so perhaps it is a blessing in disguise?”