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Hedge Fund Whiz Anand Parekh Drops the Ax on Micron (MU)


Anand Parekh set his Chicago-based hedge fund Alyeska Investment Group into motion back at the start of 2008, borrowing the title from an Aleut word that translates to “big country,” setting high expectations for the success to come. Between Alyeska’s founding and now, the firm has managed to continue to grow, yielding positive returns year-after-year, even while confronting market dips its first two years.

This can be a testament to Parekh’s quick wit, with a market neutral strategy-minded mentality that helped him to manage between $2 and a half to $3 billion just three years after Alyeska was put into drive. Operating from long and short positions alike, the fleet-footed marathon runner’s sharp synapses have led Parekh from global head of equities at Citadel Investment Group to a well-respected hedge fund guru in his own right.

How did Parekh’s Alyeska size up giants Micron (NASDAQ:MU) in the first quarter? Let’s dive in:

Throwing in the Towel on Micron

Micron just got ditched in the worst way: Parekh chose to sell 99% or 698,518 shares of his 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?

MKM analyst Ruben Roy doesn’t seem to worry. Roy continues to view Micron shares positively as he remains  bullish on secular changes in the memory industry and company specific drivers for MU.

“Despite the 47% YTD increase, MU shares continue to trade at a valuation that suggests skepticism relative to the longer-term sustainability of the current memory cycle (5.8x our C2019 EPS estimate). We believe that the continued favorable DRAM supply/demand environment will extend into the back half of this year and this, coupled with continued cost reduction catalysts specific to MU, as outlined at the company’s recent analyst meeting, should ultimately yield multiple expansion,” Roy noted.

As such, Roy rates Micron shares a Buy, with a $72 price target, which implies a 24% upside from current levels. (To watch Roy’s track record, click here)