What do the top Hedge Fund and Mutual Fund Gurus like in the Fabless Semiconductor Industry? This article, the twenty-third in a series, identifies through a research of the latest available institutional 13-F filings, the Gurus who are most invested in the Fabless Semiconductor Industry, and the specific stocks within that industry segment that they prefer to hold in their portfolios.
The Fabless Semiconductor group includes memory, storage and microprocessor fabless chip companies, wireless and networking fabless chip companies, and also those designing digital, analog, logic and graphics ICs. The semiconductor manufacturing companies in each of those categories will be analyzed separately in a forthcoming article.
Also, please note that this article will be among the last in this series, as the latest March 2011, quarter 13-F Institutional filings are now beginning to come out. About 40% were out as of this weekend, and most should be filed by the end of this week. As such, once 13-F filings are complete for all Guru funds, in the next series starting the end of this week to the beginning of next week, I will bring to you the ‘Top New and Added Picks’ of Guru Funds by industry/sector, detailing not the top holdings, but more importantly what ‘New’ positions they took and what existing positions they added to in the latest March 2011 quarter.
The first twenty articles in the series identified Gurus who are over-weight in the Solar sector, Utilities sector, China stocks, Airline sector, Optical Networking sector, Chemicals industry, Oil and Gas Exploration Industry, the Automobile Industry, the Biotech Industry, the Consumer Non-Durable Goods Sector, the Gold and Silver Mining Industry, and the Regional Banking Industry, the Insurance Industry, the Computer Hardware and Peripherals Industry, the Big Pharmaceuticals and Generic Pharmaceuticals segments, the Money Center and Foreign Bank Sector, the Semiconductor Equipment Industry, the Broadcasting and Publishing Industry, the Computer Software Industry, and the Foreign Telecommunications Services Industry, and the stocks within those industries/sectors that they hold in their portfolios (For those familiar with the series, skip over to the seventh paragraph).
A Guru is defined as someone who is regarded as having great knowledge, wisdom, and authority in a certain area. When it comes to hedge funds, there are a number of ways to anoint leading managers as Gurus including long-term performance, low portfolio volatility and an elite reputation in the investment community.
Many of us are familiar with leading investors and hedge fund managers such as Warren Buffett, George Soros, Carl Icahn and Julian Robertson, but the hedge fund community alone includes over 9,000 funds; add in mutual funds, ETFs, and other investment entities and the number is likely to be at least two to three times greater. While there is no official list of Gurus, less than one percent or between 100 to 200 fund managers are commonly believed by the larger investment community to have earned the distinction of being called Gurus.
The study of the investing habits of Gurus can be informative as these are very savvy, well-respected investors with high personal net worth deploying large sums of capital from their funds on a regular basis. They have a long-term track record of success, and while one can easily just ride their coattails, the savvy investor may want to use these lists as a starting point to conduct their own due diligence.
The total capitalization of the US Equity markets is somewhere in the $15 trillion range, and the total market capitalization of fabless semiconductor companies is just over $110 billion or 0.75% of the overall market. The Table lists six investment Gurus whose funds have invested at least 1.5% in the fabless Semiconductor Industry, which is two times the average of 0.75%. The following is a list of the top fabless semiconductor company picks of Guru Funds over-concentrated in that Sector:
- Fabless microprocessor chip companies such as Marvell Technology Group (NASDAQ:MRVL), a designer of analog, digital, mixed-signal and microprocessor ICs for Storage, Telecommunications, Data and Consumer markets; Advanced Micro Devices (NYSE:AMD), a designer of microprocessors, embedded media and graphics processors, and chipsets for computer and consumer electronics; and ARM Holdings PLC ADS (NASDAQ:ARMH), a British designer of microprocessors and physical IP components used in mobile phones, computing devices and digital TVs.
- Fabless graphics processor chip companies such as Nvidia Corp. (NASDAQ:NVDA), a designer of graphic processing units used in personal computers, workstations, game consoles, and mobile devices; and Trident Microsystems Inc. (TRID), a designer of ICs, video processors, demodulators, audio decoders, and frame rate converters used in digital and LCD TVs.
- Netlogic Microsystems (NASDAQ:NETL), a designer of multi-core, knowledge-based and ultra low-power embedded processors.
- Fabless networking chip companies such as Broadcom Corp CL A (NASDAQ:BRCM), a designer of ICs for the delivery of voice, video and data to mobile devices, networking products and service carriers; and RDA Microelectronics ADS (NASDAQ:RDA), a Chinese designer of RF and mixed-signal semiconductors for cellular, broadcast and connectivity applications.
- Avago Technologies Ltd. (NASDAQ:AVGO), a Singaporean designer of analog ICs for Telecommunications, Industrial, Automotive and Computing markets.
- Himax Technologies ADS (NASDAQ:HIMX), a Taiwanese designer of display drivers for thin-film transistor flat panel LCD displays including TVs and PC monitors.
- Silicon Laboratories Inc. (NASDAQ:SLAB), a designer of analog-intensive, mixed-signal ICs used in electronic portable devices, satellite set-top boxes, and AM/FM radios.
- Xilinx Inc. (NASDAQ:XLNX), a designer of field programmable gate arrays and complex programmable logic devices.
- Cirrus Logic Inc. (NASDAQ:CRUS), a designer of analog and mixed-signal ICs and embedded software for consumer and commercial audio, industrial and energy markets.
- Exar Corp. (NYSE:EXAR), a designer of power management and interface components, data communication products, storage optimization solutions, network security and applied service processors.
- Omnivision Technologies (NASDAQ:OVTI), a designer of digital and analog image sensors for compact cameras used in mobile phones, notebook computers, and webcams.
- PMC Sierra Inc. (NASDAQ:PMCS), a designer of controllers, framers, line interface units, packets processors and transceivers.
- LSI Corp. (NASDAQ:LSI), a designer of ICs used in hard disk and solid state drives, high-speed communications and storage systems, computer servers and PCs.
Fund and Guru
Type of Fund
Assets Under Management
Percent Equity Portfolio invested in Equities of Companies in fabless Semiconductor Industry
Major fabless Semiconductor company positions in Portfolio
Maverick Capital (Lee Ainslie)
$ 9.4 billion
Centaur Capital Partners, LP (Zeke Ashton)
$ 98 million
Joho Capital LLC (Robert Karr)
Hedge Fund - Long/Short
$ 600 million
Kingdon Capital Management LLC (Mark Kingdon)
Hedge Fund – GARP
$ 2.9 billion
BRCM, NETL, SLAB, XLNX, TRID
Jabre Capital Partners (Philippe Jabre)
Asset Management including Hedge Fund
NVDA, MRVL, AMD, CRUS
Soros Fund Management LLC (George Soros)
Hedge Fund - Long/Short
$ 5.1 billion
EXAR, BRCM, RDA, OVTI, NVDA, PMCS, ARMH, LSI
Dallas, TX-based Hedge Fund Maverick Capital was founded in 1993 by Lee Ainslie. Mr. Ainslie is one of the Tiger Cubs, so called because they learned to pick stocks at Julian Robertson's legendary hedge fund Tiger Management LLC. For an almost $10 billion fund, it is relatively concentrated in only 71 securities, with 40% of the fund being invested in the Technology Sector.
Zeke Ashton's Centaur Capital Partners manages the investments for the Centaur Value Fund and the Tilson Dividend Fund. Its investment philosophy is Buffett-like based upon value principles, and selects stock investments based upon true business value as reflected by asset value, cash flow generation, management quality, and the competitive advantages of the underlying businesses when such stocks are available at compelling prices.
Joho Capital, with $600 million in assets under management (AUM), was founded by Robert Karr in 1996. Mr. Karr is also one of the Tiger Cubs, again, so called because they learned to pick stocks at Julian Robertson's legendary hedge fund Tiger Management LLC. The fund is generally concentrated in new technologies, with over 40% of the current allocation in Chinese equities.
Hedge fund Kingdon Capital Management, with $2.9 billion AUM, all in equities, was founded in 1983 by President Mark Kingdon, and is growth-focused employed a growth at a reasonable price (GARP) approach to investing.
Jabre Capital Partners, headquartered in Geneva, was started by Lebanese-born Philippe Jabre in 2007. It is an asset management firm that offers both hedge fund and traditional management strategies.
Mr. Soros is a Hungarian-born renowned American investor, most famous for his spearheading the Quantum Fund that is believed to have single-handedly broken the Bank of England in 1992, forcing it to devalue the pound. A mere $1,000 invested in 1969 when Soros established the Quantum Fund would have been worth $4 million by the year 2000, achieving a cumulative return of 32%.
Credit: Historical fundamentals including operating metrics and stock ownership information were derived using I-Metrix® by Edgar Online®, Zacks Investment Research, DailyGraphs®, Thomson Reuters and Briefing.com. Fund data including assets under management and firm profiles are sourced mostly from Hedgetracker.com. The information and data is believed to be accurate, but no guarantees or representations are made.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Disclaimer: Material presented here is for informational purposes only. Nothing in this article should be taken as a solicitation to purchase or sell securities. Before buying or selling any stock you should do your own research and reach your own conclusion. Further, these are my opinions and I may be wrong. I may have positions in securities mentioned in this article. You should take this into consideration before acting on any advice given in this article. If this makes you uncomfortable, then do not listen to my thoughts and opinions. The contents of this article do not take into consideration your individual investment objectives so consult with your own financial adviser before making an investment decision. Investing includes certain risks including loss of principal.