Uncovering Hidden Gems in Institutional Investor Portfolios
Every quarter, institutional investors with over $100 million in assets under management are required to file Form 13F with the Securities and Exchange Commission. This provides a unique opportunity for individual investors to gain insight into the investment strategies of top-tier money managers.
A Closer Look at Millennium Management’s Portfolio
One such billionaire investor is Israel Englander of Millennium Management, who oversees a staggering $216 billion investment portfolio spread across thousands of securities. By analyzing Englander’s recent 13F filing, we can identify some interesting trends and shifts in his investment strategy.
AT&T: A Surprising Sell
Among the thousands of positions Englander and his team have reduced, one of the most notable is the selling activity in telecom giant AT&T (NYSE: T). Despite the company’s impressive 49% total return over the trailing year, Englander has sold approximately 40% of his fund’s stake in AT&T. This move may be attributed to profit-taking, as AT&T’s forward price-to-earnings ratio of 10 is still below that of the benchmark S&P 500. Additionally, concerns over potential legal expenses related to the use of lead-sheathed cables may have contributed to Englander’s decision.
A Contrarian View on AT&T
As a shareholder of AT&T, it’s difficult to understand why Millennium would reduce its stake in the company. AT&T’s shift to 5G download speeds has led to a modest but steady growth cycle in most facets of its business. Moreover, the company has made significant progress in reducing its debt since spinning off its content arm WarnerMedia in April 2022.
Super Micro Computer: A Risky Bet
On the other hand, Englander and his team have made a significant purchase in customizable rack server and storage solutions company Super Micro Computer (NASDAQ: SMCI). Millennium’s 13F shows that 5,533,230 shares were purchased, increasing the fund’s stake in Super Micro by over 800%. While Super Micro appears to be a promising investment, with sales jumping 110% to $14.94 billion in its most recent fiscal year, concerns over the company’s financial statements and alleged trustworthiness issues cannot be ignored.
A Word of Caution
Before investing in Super Micro Computer, it’s essential to consider the ongoing probe by the U.S. Justice Department into the company’s accounting practices and the recent resignation of its accounting firm Ernst & Young. Until these issues are resolved, it may be wise to exercise caution when considering Super Micro as a potential investment opportunity.
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