Polar Capital’s prized investment savvy boils down to evaluating stocks impressing with investment performance of long-term gains- and less of a focus on amassing a lot of assets. As of January, the hedge fund selected former JO Hambro Capital Management (JOHCM) leader Gavin Rochussen to be chief executive in former CEO Tim Woolley’s stead. This is an exciting pick for the assets management team, as Rochussen in his eight years at JOHCM brought assets from £1.5 billion to £23.9 billion by 2016. Under the new leadership of this trading whiz, Polar Capital is building up positions in two leading chip giants, Advanced Micro Devices, Inc. (NASDAQ:AMD) and NVIDIA Corporation (NASDAQ:NVDA), but shedding shares in Intel Corporation (NASDAQ:INTC).
Let’s explore why Rochussen sees fit to back two of these three Wall Street rivals in the cutthroat chip battleground:
Advanced Micro Devices Gets a Bullish Bump Up
For a smooth second-quarter bullish play, Gavin Rochussen bolstered his holding in the chip giant to the tune of 1,193,949 added shares, taking his holding up to 4,332,533 shares worth $54,054,000. Polar Capital’s confident move on AMD aligns with flashes of momentum the chip giant is showcasing, particularly as the Ryzen processor launch reveals better mindshare and shelf-space.
These Ryzen desktop-PC processors have captured 30% to 50% share at leading e-tailors, which notably far outperforms the giant’s 11% desktop unit share under its present command.
Merrill Lynch analyst Vivek Arya finds that “The key conclusion is that AMD has momentum which should gradually translate to share gains.” Therefore, Polar Capital’s multi-million share lift is looking good right now. In fact, Arya would argue that Intel could be withering under AMD’s innovative edge, with Ryzen chips carrying double the processor cores for competitively similar prices, all while translating “to better multi-tasking/productivity.” With the giant glancing at a more expansive PC original equipment manufacturer (OEM) placement, the analyst anticipates sales will see a step-up in a major way waiting in the back half of the year.
As such, the analyst maintains a Buy rating on the stock with a price target of $18, implying a 43% increase from current levels. (To watch Arya’s track record, click here)
The word on the Street rings largely bullish on this chip giant, backing Rochussen’s confident move, with TipRanks analytics demonstrating AMD as a Buy. Out of 21 analysts polled by TipRanks in the last 3 months, 9 are bullish on Advanced Micro Devices stock, 9 remain sidelined, and 3 are bearish on the stock. With a return potential of nearly 15%, the stock’s consensus target price stands at $14.37.
Nvidia Is Another Chip Marker Worth a Stronger Bet
NVDA is seeing a vote of confidence from Polar Capital, as Rochussen went for a 50,848 share upgrade this quarter, with a holding now boasting 228,564 shares worth $33,034,000. It could be a smart turn in favor of the chip giant, especially with chances for meaningful upside glimmering above where the stock is already trading.
Ivan Feinseth of Tigress sees that in an atmosphere of gaming-meets-crypto-currency, Nvidia is a clear victor in the midst, with robust performance in its business segment. From the eyes of Feinseth, Nvidia is a market leader, and its quick-fire GPUs are evolving the giant well past the gaming arena, pushing to “new emerging industries.”
Pinpointing a path rolling full bullish steam ahead for the giant, the analyst maintains a Buy on NVDA shares without listing a price target. (To watch Feinseth’s track record, click here)
When assessing the technology set to lead the future, the analyst predicts, “NVDA’s ability to incorporate AI technology in cloud computing services, self-driving vehicles and home automation will continue to drive new opportunities for growth.” Likewise, it is no wonder the hedge fund guru and the analyst are backing this chip giant, with Nvidia rising to become a key supplier of its unique technology to the automotive market. Feinstein would not be surprised to see home runs in outperformance from Nvidia as demand in artificial intelligence and crypto currency data mining continues to soar, driving results that will make this stock one to notice.
The Street sides with Polar Capital’s enthusiastic conviction, as TipRanks analytics indicate NVDA as a Buy. Based on 25 analysts polled by TipRanks in the last 3 months, 16 rate a Buy on Nvidia stock, 6 maintain a Hold, while 3 issue a Sell on the stock. The 12-month average price target stands at $156.45, marking a 5% downside from where the stock is currently trading.
Intel Gets a Shave
Of the battle of the chip makers, Intel is a giant that Polar Capital selects as the riskiest of the gambles, choosing to pull back 580,034 shares down to a position of 227,660 shares worth $7,681,000. It appears Rochussen is not the only one wondering what has been happening at Intel’s headquarters, especially considering the immense threat of its competition.
Intel’s former CFO and recently promoted Group President of Manufacturing, Ops, and Sales Stacy Smith revealed on Tuesday that after 30 years with the company, he would be moving on to retirement- news that has Rosenblatt analyst Hans Mosesmann frowning, deeming the news “unsettling given Mr. Smith was in direct line-of-sight to be the next CEO of Intel and it is after the announced leave of absence of Diane Bryant head of the data center unit back in May.”
It is not looking too bright for Intel shareholders from Mosesmann’s standing, and as such, the analyst reiterates a Sell rating on shares of INTC without suggesting a price target. (To watch Mosesmann’s track record, click here)
“We are surprised at the relative silence by the street on this organizational change at Intel particularly since Mr. Smith has not ended his professional career by any means,” comments the analyst.
“Our take – The notion forwarded by some that the timing of Mr. Smith’s departure (with no apparent replacement) is not related to Intel’s business is, dare we say, naïve. Nothing happens in the Valley at this level by happenstance. The departure is highly negative for Intel and suggests an organization that is in flux in the midst of the most important opportunities and threats in the company’s history,” Mosesmann contends.
The rest of Wall Street is less bearish and is not selling Intel shares just yet, considering that TipRanks analytics exhibit INTC as a Buy. Out of 25 analysts polled by TipRanks in the last 3 months, 12 are bullish on Intel stock, 9 remain sidelined, and 4 are bearish on the stock. With a return potential of 14%, the stock’s consensus target price stands at $39.65.