PRIMECAP Management added 4,477,472 shares to its stake in Micron Technology Inc. (MU, Financial) in the first quarter
Micron Technology is a global leader in the semiconductor industry. The company was originally incorporated in October 1978 in Boise, Idaho. Since the company was founded over 35 years ago, it has produced more than 20,000 patents in more than 20 countries, and it employs over 30,000 people worldwide.
The company operates in four business segments: Computer and Networking Business Unit, which includes memory products sold into computer, networking, graphics and cloud server markets; Mobile Business Unit, which includes memory products sold into smartphone, tablet and other mobile device markets, and Storage Business Unit for memory products sold into enterprise, client, cloud and removable storage markets. It also includes products that are later sold to Intel (INTC, Financial) through the company’s IMFT joint venture.
Micron also has an Embedded Business Unit that includes memory products sold into the automotive, industrial, connected home and consumer electronics markets. Micron Technology’s main competition is Samsung Electronics Co. (LSE:SMSD, Financial), SanDisk Corp. (SNDK, Financial), SK Hynix Inc. (HXSCL, Financial) and Toshiba Corp. (TOSBF, Financial).
Micron has a market cap of $10.79 billion, a P/E ratio of 11.08, an enterprise value of $15.23 billion and a P/B ratio of 0.89.
Micron has three good signs, according to GuruFocus. The company’s current price is close to a two-year low. Micron has a current P/B ratio of 0.93, which is close to the three-year low of 0.88. The company’s P/S ratio is also close to the three-year low of 0.85.
PRIMECAP Management was founded in September 1983 in Pasadena, California, by Theo Kolokotrones, Mitch Milias and the late Howard Schow, who passed away in April 2012. PRIMECAP Management is an independent investment management company. The firm’s goal is to provide superior long-term equity investment results by following an investment approach based on four key principles which include a commitment to fundamental research, a long-term investment horizon, an emphasis on individual decision making and a strong focus on value. PRIMECAP Management’s principal portfolio managers have an average of 24 years of investment management experience.
Micron is also traded in Germany, Mexico and Switzerland.
In the first quarter, David Einhorn (Trades, Portfolio), guru and founder of Greenlight Capital, said Micron Technology "was our biggest winner in 2014 and our biggest loser in 2015. We have written a lot about it and have exited the position. When all the dust settled, our average purchase was at $19.93, and our average sale was at $22.14, generating an IRR of 14%. The coulda-woulda-shoulda perspective that this was a disaster is belied by the overall decent return we made on the investment.
It is possible that PRIMECAP Management increased its stake in Micron for the following reasons.
- The company’s revenue growth ratio is 18.50, according to GuruFocus, which ranks it higher than 87% of the companies in the Global Semiconductor Memory industry.
- The company’s price is currently at a two-year low, which is a good sign.
- Micron also has over 35 years of experience in its industry, which shows it can withstand the variance and competition within its industry.
Below is a Peter Lynch chart for Micron.
Cheers to your investment success.
