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Micron Technology, Inc.’s (MU) stock plunged by roughly 50% from its May 2018 high of roughly $62 to a December low of $29. Thus far, 2019 has been a better year, with the stock rising by 32%. However, the equity saw some very notable investors significantly reduce their holdings in the fourth quarter of 2018.

Part of the reason for the stocks improved performance in 2019 has come on the promise and hopes of an improving DRAM market. Prices for DRAM, dynamic random-access memory chips used in everything from personal computers to wireless phones, have fallen sharply over the past several months. However, the company has indicated in past conference calls that it expects the prices for memory chips to rebound in the second half of 2019.

Notable Investors Reduce Holdings

During the fourth quarter, Appaloosa LP, which is run by the famous investor David Tepper, dumped nearly 20 million shares, reducing its stake to 16 million. Even with the massive reduction in its holdings, the stock is still by far the fund’s most significant position valued at $507 million. Janus Henderson Group Plc. was a big seller of Micron in the fourth quarter as well. The firm dumped nearly 60% of its holdings, bringing the total shares held down to 3.6 million shares.

Net Sellers

Overall, hedge funds were a net seller of Micron during the fourth quarter. The number of total 13F shares held by hedge funds fell by 6% to 97.3 million. In total, 19 funds created new positions in the stock, while 42 added to their existing positions. Additionally, 26 funds closed out their positions, while 32 reduced their stakes. Overall, the total number of total 13F shares held by institutions remained relatively unchanged.

The Outlook Is Bleak

The outlook for Micron is bleak, based upon analysts’ estimates. Currently, revenue for the company is seen declining 8% in 2019 to $23.7 billion, while earnings are expected to fall by 46% to $6.42 per share. The outlook for 2020 is expected to be even worse with revenue declining by an additional 5% to $22.6 billion. Earnings are also expected to fall in 2020 by 23% further to $4.96 per share.


Based on the current revenue and earnings estimates, perhaps Janus Henderson’s and Appaloosa’s sales during the fourth quarter where likely the prudent thing to do. The question that many investors are still wondering about is whether the company can deliver on a better second half in 2019 or if the outlook continues to look dire.  If the second half does not show the improvement investors are hoping for, the stock is likely to head back to its 2018 lows.

This entry was posted on Monday, March 25th, 2019 at 8:47 am and is filed under 13F, Hedge Fund News, Stock. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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