Wedgewood Partners, in its Q3 2023 investor letter, reported a -2.4% net return for its Large Cap Focused Growth Fund, surpassing key indexes. The firm highlighted two major holdings: Motorola Solutions (NYSE:MSI), Inc., a public safety and enterprise security solutions provider, and Taiwan Semiconductor Manufacturing Company Limited (TSM), an integrated circuit manufacturer.
On October 20, 2023, Motorola's stock price was $281.25 per share with a one-month return of 1.26% and a 52-week gain of 24.24%. According to InvestingPro data, the company's market cap stood at $46.974 billion, and its P/E ratio was 31.34. Wedgewood commended Motorola's Q3 performance which saw a revenue growth of +12%, an adjusted operating profit rise of +29% due to better pricing and easing supply chain costs, and backlog growth of +6%. The company's Land Mobile Radio (LMR) infrastructure and software and service solutions were noted as critical for public safety customers amidst chronic labor shortages. InvestingPro Tips also indicates that Motorola has been a prominent player in the Communications Equipment industry and has maintained dividend payments for 13 consecutive years, further emphasizing its stability and reliability in the market.
Motorola was held by 43 hedge fund portfolios at the end of Q2, up from 37 previously. Despite this, it did not make it onto the list of the '30 Most Popular Stocks Among Hedge Funds' as per Insider Monkey. It is among Credit Suisse's highest-conviction picks.
In contrast, TSM showed a 10% revenue decline due to pandemic normalization but still holds a commanding market position. As of October 20, 2023, TSM's stock stood at $91.31 per share, showing a one-month return of 5.88% and a yearly gain of 48.98%. The firm's market cap is $473.571 billion, with a P/E ratio of 14.93, as per InvestingPro data.
Wedgewood Partners remains positive about TSM's future due to its aggressive investment strategy, close collaboration with fabless IC designers, and adoption of open development libraries. The company is held by 121 hedge fund portfolios as of Q2's end and is featured on a list of attractive tech stocks to buy. Like Motorola, TSM did not make it onto the list of the top 30 most popular stocks among hedge funds. InvestingPro Tips highlights that TSM is a prominent player in the Semiconductors and Semiconductor Equipment industry and has consistently increased its earnings per share, indicating a promising outlook for the company.
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