GP Bullhound Thyra Hedge Fund – juni 2024

GP Bullhound Thyra Hedge Fund – June 2024

Volatility in the major tech stocks has increased over the past month. However, the industry fundamentals have not changed and the strength in the areas around AI continues, however, several sectors still struggle with inventory overhang, such as in networking. Volatility is driven by high valuations and the strong rally we've seen in the AI names. GP Bullhound Thyra Hedge finished up 4.16 % in June.

A focus area in June has been the memory market. Micron Q3 results exceeded Micron's previously communicated expectations. Both DRAM and NAND prices rose by 20 % q/q. Micron's HBM memory sales are expected to reach $100 million in 2024 and then billions in 2025. The company is the second largest vendor in the market after SK Hynix and expects its market share to increase in 2025. Micron's HBM inventory is sold out for both 2024 and 2025, with prices already agreed for the majority of 2025.

The company's estimate is in line with expectations, although the consensus was slightly higher, which led to a decline in the share price during the report day. We believe that the company's estimates are too low in the short term, given the current trends in the industry. The risk is, as always, that producers add too much capacity and produce too high volumes, which would push prices down. We see the result as a further indicator of strong demand for AI products and memory capacity in the coming years.

According to industry news, Chinese DRAM maker ChangXin Memory Technologies (CXMT) (we do not own) has received government approval to build a new production facility in Shanghai. Here again, the biggest risk to the recovery of the memory market is that too much capacity is added in the short term. This isn't a problem at the moment, but it's definitely something to watch out for.

Quote of the month - Sanjay Mehrotra - President and CEO of Micron "Due to expectations for continued leading-edge node tightness, we are seeing increased interest from many customers across market segments to secure 2025 long-term agreements ahead of their typical schedule."

We have not made any major changes to the portfolio this month. Overall, we seek to generate additional returns by buying on weakness and selling on strength in individual names.

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