Quant hedge fund guru Peter Muller always had a sharp eye for playing the numbers game, even before earning a math degree from Princeton with honors. In Muller’s spare time, when he’s not managing his Process Driven Trading (PDT) Partners hedge fund, a proprietary spin-off from Morgan Stanley these past five years, he is creating the latest New York Times crossword puzzle.
A quick-witted numbers whiz and CEO of PDT, Muller knows how to size up a stock and solve for risk vs. reward. Let’s take a closer look at the hedge fund manager’s recent moves in tech giants Advanced Micro Devices, Inc. (NASDAQ:AMD) and Apple Inc. (NASDAQ:AAPL):
Advanced Micro Devices, Inc.
Though AMD stock has as skyrocketed almost 400% in the last year, short interest has also equally surged, with investors gambling that Ryzen chip problems could ultimately plague the chip giant. Though only PCs running FMA3 code suffer lock hindrances, with the giant hoping to take the throne from Intel, it needs every asset working in perfect harmony.
From the eyes of S3 Partners analyst Ihor Dusaniwsky, “We may be at a tipping point for AMD — if its stock price continues to increase, shorts may cut their losses and be squeezed out of their trades, but if AMD’s stock price begins to drop, we may see short interest explode as AMD slides down to the analysts’ target price of $11.50,” adding short-seller confidence scales “very high” these days.
Consider that short interest in the chip giant hit $1 billion in January, has since escalated to $1.55 billion, a 55% rise year-to-date, not having soared at these levels in a decade.
Nonetheless, PDT goes against the short seller tide, choosing to set even higher expectations on AMD’s success. According to the latest SEC filing, PDT adds 196% of its holding in AMD to 3,415,648 shares worth $38,733K. Perhaps Peter Muller remains largely unfazed considering the chip issues are so very specific, that when looking at a picture of the entire consumer base, AMD still is on fighting ground.
TipRanks analytics show AMD as a Buy. Out of 19 analysts polled by TipRanks in the last 3 months, 9 are bullish on AMD stock, 9 remain sidelined, and 1 is bearish on the stock. With a loss potential of nearly 15%, the stock’s consensus target price stands at $11.75.
Apple continues to glide to record highs on back of iPhone 8 hype, with analysts across the Street bullish in the tech giant’s corner. Yet, Peter Muller seems to uncover room for caution, with PDT trimming 7% of its holding in Apple, leaving 83,700 shares worth $9,694K. Maybe the numbers wizard recognizes margin for error that most of Wall Street has overlooked, distracted as Apple prepares to hit the refresh button on its iPhone.
From a vantage point of much more confidence, venture capitalist and longtime Apple expert Gene Munster cheers the “golden opportunity” Apple shares present to investors, suggesting a price range between $180 to $200 per share. For Munster, should investors choose to bet on the stock, they should only prepare for “clear sailing,” with no clouds in sight.
Likewise, Drexel Hamilton analyst Brian White not only sings the praises of Apple, ranking it “among the most underappreciated stocks in the world,” he also believes rival Samsung better watch out, as the tech giant is gunning for its competition. “Apple has Samsung on the ropes like never before in recent memory,” asserts White, who reiterates a Buy rating on AAPL with a $185 price target, which represents a 28% increase from where the shares last closed.
As Samsung dangles precariously in the balance, White believes, “With Apple operating on all cylinders and a strong iPhone launch expected this fall, combined with the rise of more China-based competitors, we believe the pressure is on Samsung to deliver a strong upgrade without any missteps. We believe if Samsung stumbles again, the company’s position in the smartphone market could be permanently impaired.”
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, five-star analyst Brian White is ranked #145 out of 4,556 analysts. White has a 65% success rate and realizes 10.2% in his yearly returns. When recommending AAPL, White yields 24.0% in average profits on the stock.
Even UBS analyst Steven Milunovich foresees Apple shares circling $200 per share sometime in the next couple of years should it ride the momentum of “the next major trend” to full “supercycle” iPhone launch glory. With a “larger than ever” existing customer base set to clamor for a highly anticipated new OLED display, Milunovich pinpoints clear advantage weighing in Apple’s favor.
TipRanks analytics indicate AAPL as a Buy. Based on 37 analysts polled by TipRanks in the last 3 months, 29 rate a Buy on Apple stock, 6 remain sidelined, and 2 are bearish on the stock. The 12-month average price target stands at $153.07, marking a 6% upside from where the stock is currently trading.