Israel Englander is the chairman and CEO of Millennium Management LLC, a hedge fund that manages more than $35 billion. Englander – whose father’s side of the family was killed in the Holocaust – began his career as an intern at Oppenheimer & Co. and worked in multiple Wall Street firms after college before launching Millennium in 1989. Englander is worth $6 billion and is also active in philanthropy, including his Englander Foundation, which he launched with his wife in 2006.
Millennium is among the world’s largest hedge funds, and Englander is one the most successful fund managers today. He was ranked fifth on Forbes’ Highest-Earning Hedge Fund Managers list, earning $900 million in 2017. The fund invests in a wide-range of sectors, including services, technology and financial. Its largest holding is in SPDR S&P 500 ETF Trust, but only accounts for 2.3% of its portfolio.
Through the first nine months of this year, Millennium returned 8.3%, compared to 1.7% for hedge funds on average. In the most recent quarter, Millennium sold more than half its position in Advanced Micro Devices (AMD) and increased its position in rival Intel (INTC) by more than 60%.
Englander Sells AMD
Englander is doing with AMD what most investors are doing – running away. Though the stock surged yesterday (along with the rest of the market), the company is still down more than 40% since it hit a 52-week high in September. Englander and Millennium sold 3.3 million shares of the company in the last quarter, as investors are worried about slowing demand for CPUs, which have contributed to its three-month plummet.
Investors are plenty bullish on AMD in the long-term but are most worried about the short-term challenges ahead. Trade tensions and US political uncertainty (including the investigation into President Trump and the new Congress) are playing a negative role as the company relies heavily on strong US-China relations. But falling semiconductor prices is also playing a large part in poor investor sentiment, as slowing demand and high supply is pushing average selling prices down, contributing to lower revenue.
To the company’s credit, Wall Street is excited about AMD’s long-term prospects, including its new 7-nanometer (nm) processing chip set to be released next year. AMD is also increasingly eating at Intel’s (below) CPU market share, and German retailer Mindfactory.de reported that it sold double the amount of AMD processors than Intel in November. Finally, AMD’s new partnership with Amazon Web Services is serving as a potential massive opportunity for the company.
Overall, while Englander is too excited about the stock, Wall Street analysts are still moderately optimistic. TipRanks analysis of 25 analyst ratings show a consensus Moderate Buy, with a 43% upside. Of the 25 analysts polled, 12 recommend Buy, 11 say Hold and two recommend Sell (See AMD’s price targets and analyst ratings on TipRanks).
Swaps AMD for Intel
Even as AMD seems to be making ground against Intel, Englander actually increased his position in Intel by nearly 240,000 shares. The company’s stock has had a worse year than AMD and others in the industry but has been a more stable investment. Overall for the year, the company is down only 1.4%, after having risen by more than 20% in June.
Intel continues to reinvent itself as more than just a PC-chipmaker. The company has expanded to data centers, self-driving cars (through the acquisition of MobileEye) and IoT – all of which have tremendous growth prospects in the future. Investors expect revenue from its data centers segment to surpass that of its PC segment within the next three years, as data centers are rapidly growing while PCs are more-or-less in stagnation or slow growth. Furthermore, as 5G internet becomes mainstream, IoT will become of higher importance while the viability of mass-produced self-driving cars takes another step to reality.
But while Englander increased his position in the company, some investors are concerned after its CEO abruptly resigned in June. Intel continues to lag other tech giants which has been able to better transition away from only PCs. Finally, while rival AMD is expected to release its 7-nm chip next year, Intel is still plagued with production challenges on its 10-nm Cannon Lake chip.
Overall, TipRanks analysis of 31 analyst ratings of Intel shows a consensus Moderate Buy, but this rating is slightly deceiving. Of the 31 analysts, 15 recommend Buy, but 16 recommend Hold or Sell (10 and 6 analysts, respectively). There is an average price target of $53.88, or 17% higher than its current level. (See INTC’s price targets and analyst ratings on TipRanks).