The Israeli phrase, “rosh gadol,” which translates to a person who intelligently think outside the box- looks to be a way of life for Israeli-American billionaire Noam Gottesman. The man who co-founded hedge fund GLG Partners, a firm which went on to manage $24.6 billion has since gone on to become CEO of investment firm and family office TOMS Capital firm. Here, the self-made billionaire manages his personal investments, along with art and philanthropy. Recently, Gottesman took two big stake shifts in memory chip giants Advanced Micro Devices, Inc. (NASDAQ:AMD) and Micron Technology, Inc. (NASDAQ:MU).
Let’s dive in:
AMD Draws a Big Bite from the Billionaire
Advanced Micro Devices has really caught Gottesman’s eye in the latest quarter, with Gottesman seeing fit to invest in a big way in the chip giant’s budding empire. The billionaire upped his stake in the company to the tune of a massive 1,365,974 shares – taking the total holding to 1,530,407 shares worth $15,732,000.
What enticed the billionaire to jump up his holding with such bullish confidence? Perhaps it’s the company’s new Ryzen processor models for desktops, complete with central processing unit (CPU)-meets-graphics processing unit (GPU) architectures that finesse Radeon Vega graphics. With forthcoming launches of the $169 Ryzen 5 2400G and the $99 Ryzen 3 2200G, these processors come at competitively attractive prices against rival Intel’s processors and Nvidia’s graphics cards. In dialing down gaming costs as well as different types of computing on desktop computers, AMD’s Ryzen portfolio is getting that much more compelling.
Notably, this is a step for AMD, having never designed Ryzen-Vega combo chips specifically for desktop computers before now. This chip giant is gunning for CPU market share with a vengeance, and the move couldn’t come at a better time. As Intel has faltered amid its Meltdown vulnerability, damaging investor confidence along the way, AMD could be a share-gaining winner in the scope of a chip-maker-eats-chip-maker-world. Clearly, a tycoon as intelligent as Gottesman would take notice, so it is no wonder the billionaire wants to invest in the possibilities booming with AMD.
The AMD team believes they have the right competitive chip in the powerhouse Ryzen 5 2400G, a chip that allegedly could match up against Intel’s Core i5-8400 processor and Nvidia GT 1030 GPU combined. All the while, AMD boasts a strong chip that is less expensive than its rivals, which could put the advantage in this semiconductor’s camp.
Worthy of note, TipRanks indicates a solid amount of optimism making its rounds through the Wall Street grapevine on the memory chip player’s market opportunity. Therefore, it seems Gottesman’s vote of confidence rings in unison with the majority of analysts betting on the stock. Based on 14 analysts polled in the last 3 months, 7 rate a Buy on AMD stock, 4 hedge their bets and maintain a Hold, while 3 issue a Sell. Is the stock overvalued or undervalued based on these analysts’ expectations? Consider that the 12-month average price target of $15.41 marks a return potential of 26% from where the stock is currently trading. This suggests that even those that are cautious on AMD tilt more towards a positive perspective than bearish.
Gottesman Throws in the Towel on Micron
Micron just got ditched in the worst way: Gottesman chose to sell every bit of his 365,317-share stake in the chip giant this last quarter. Is it because the guru bought into NAND fears that went wild back in November, with concern running rampant that NAND flash memory chips were on the brink of a dip this quarter?
At the time, bulls argued that the sell-off was overdone, and with Micron having since revised its guide up for the second quarter, confidence has shot up; apparently not for Gottesman. Many bulls argue that this stock is underestimated by Wall Street with a valuation that makes it cheap to buy into the opportunities ahead.
In a year that has seen a memory shortage, Micron has reaped the benefits from soaring prices to profits that followed. It was only November that became a hitch in MU’s momentum, after whispers of sluggish price gains in NAND memory prices led investors to flee- and shares took a hit. Ever since, Micron is still battling to return to its move to $50 in trading. Though DRAM memory continues to be in a shortage, it’s the NAND factor of the equation that could have an expert trader of the likes of Gottesman not wanting to wait to see the aftermath of a downturn.
Investors have reason to be afraid. Keep in mind that just four years ago, Micron was enjoying a boon- thanks to a memory shortage. Yet, when that shortage met its match, mid-2016 was a rocky patch for MU investors, who had to watch shares sink below $10. The memory ghost of 2016 is precisely what is haunting tech enthusiasts today.
Wall Street traders betting on Micron contend DRAM is the bigger memory player than NAND- and with shortages still alive and well and a recent lift in guidance, the company’s valuation lends itself to a compelling time to buy into the fears. All the same, Gottesman must remember 2016 all too well- and is choosing to jump ship on this memory chip player altogether.
However, TipRanks shows this chip giant has earned one of the best analyst consensus ratings on the Street. Out of 19 analysts polled in the last 3 months, 17 are bullish on AMD’s prospects, with just 2 on the sidelines, highlighting a strong bullish backing here. It looks like Gottesman is the sole bear running on the Street against Micron at this time. With a healthy return potential of 36%, the stock’s consensus target price stands at $59.25.