Wednesday, June 24, 2015

Added Micron to portfolio

I recently added Micron to our portfolio. General thesis behind that stock is the same as with Western Digital: amount of data in the world is growing exponentially and will keep on doing that for many years to come.

All that data will be stored on the fly to volatile memory and then for permanent storage to hard disk drive or non-volatile memory (solid state drive or non-volatile memory chips inside device). Micron makes both memory chips (of volatile and non-volatile kind) as well as solid state drives (which essentially come down to bunch of non-volatile memory chips).

The amount of memory chip manufacturers have come down over the years similarly to hard disk drive providers. This should make the overall playing field more healthy as there are less players going for crazy price points at expense of profitability.

It can be also foreseen that every major step in technical advance will increase the "moat" of dominant players i.e. create barrier of entry and makes sure only the very big ones can stay on the leading edge. As with all technology, most profits are made on that edge.

There are many things that have pointed to Micron as a potentially good position. Micron has popped up in my screens as value play. Intel and Micron are collaborating on 3D NAND Flash memory technology, which may get them market share boost in this space.

What also has caught my eye is that David Einhorn has a very big position in Micron (he is one of the value oriented money managers I follow).

Finally, Micron serves as hedge to our position in Western Digital. Transition to solid state drives has not been as fast as many predicted years ago, but it's there as a trend and threat to hard disk drive manufacturers.

We have positions in Micron, Western Digital and Intel.

Tuesday, June 2, 2015

Which stocks famous money managers hold?

Dataroma tracks famous value oriented money managers that they call "superinvestors". Among them are legendary investors like Warren Buffett.

I regularly take a look what they hold, what they have bought and what let go.

An interesting question with regards to these money managers is that given they park billions, how far they deviate from index investing?

Top 20 by ownership count was as follows:

I included two more stocks into the list since Google and Berkshire is there twice with different classes of shares.

Obviously they have to select big corporations because of the amount of money they need to put into a single position.

However, the companies are not in the order that you would expect in terms of market cap. The order will change a bit if you look at amount of aggregate money in these positions, but the conclusion does not. They are still not in the order of market cap.

There are three companies with market cap below 100 billion USD: Liberty Global Inc., AIG and American Express. Very many big names with much larger market cap are not in the list: Wal-Mart, Facebook, Pfizer, P&G, Verizon, Amazon, Chevron etc.

To me it seems that atleast these money managers as aggregate deviate what could be called "index investing".

Overall, the "superinvestors" seem to prefer technology and financial sectors. Also, they clearly prefer corporations based in USA rather than elsewhere in the world - even if those would be listed in the NYSE or NASDAQ.