French international investor and “Fund Manager Lifetime Achievement” award winner Jean Marie Eveillard helms the $44.72 billion First Eagle Investment Management LLC. According to the fund’s recent disclosure with SEC, it has made several tweaks to its protfolio in the third quarter. Eveillard initiated a bullish bet on data storage company Western Digital Corp (NASDAQ: WDC) and Texas Instruments Incorporated (NASDAQ:TXN) while reigning in the fund’s positions in Seagate Technology PLC (NASDAQ:STX).
Mr. Jean Marie Eveillard started his career in 1962 with Societe Generale. He then relocated to the United States where he joined the SoGen International Fund as an analyst in 1968. In 1979, he was appointed as the portfolio manager of the Fund, later named the First Eagle Global Fund. He then went on to manage the First Eagle Overseas and First Eagle Gold Funds at their inception in 1993 as well as the First Eagle U.S. Value Fund in September 2001.
After managing the Funds for over 30 years, Mr. Eveillard now serves as Senior Adviser and member of the Board Trustees to First Eagle Funds and as a Senior Vice President of First Eagle Investment Management, LLC. According to TipRanks data, the fund has made a portfolio gain of +44.0% since June 2013 and has a 3-year annualized return of 9.97%.
Mr. Eveillard is a graduate of Écoles des Hautes Études Commerciales, an esteemed French graduate school for economic studies. He was named Morningstar’s International Manager of the Year in 2001, and in 2003 received a Lifetime Achievement Award from Morningstar for building one of the most successful long-term records in the investment business.
A true value investor, Mr. Eveillard steers away from trends and sectors most popular to the investing public. Instead, he searches the globe for original, obscure and unique situations, which are more likely to be undervalued. His preference demands patience.
Let us take a peek into 3 of Eveillard’s key tech moves in Q3:
Buys Western Digital Corp (NASDAQ:WDC)
Eveillard sees a buying opportunity for WDC in Q3, leading First Eagle Investment Management to initiate in the popular data storage device manufacturer for shares worth $36.29 million. The stock has remained almost flat since then and posted just 0.17% gain the last filing. Interestingly, this is quite a U-turn, as the fund had struck all the shares of WDC just a year ago, in Q3 2016.
Wells Fargo analyst Aaron Rakers is quite upbeat about Western Digital Corp and calls WDC as one of his top picks in IT Infrastructure & Communications Equipment. On the other hand, Morgan Stanley analyst Kathryn Huberty downgraded the rating on Western Digital Corp. due to the deteriorating NAND prices and uncertainty regarding its Toshiba Memory joint venture weigh on the company.
Meanwhile, Mark Miller fromBenchmark Co. remains bullish on WDC. He said, “We expect further pay down of debt over the next two years. In particular, there are $1.88 billion in secured notes due 2023, which carry an interest rate of 7.375% and the $3.35 billion in unsecured notes due 2024, which carry a rate of $10.5%. Paying down these notes would save $490 million in annual interest expense, or $1.58 per diluted share. While the situation with the sale of Toshiba’s flash chip unit and the resulting litigation has caused the shares to be range bound over the last six months, we believe Western Digital’s position affords it some leverage. As such, we would not be surprised if Western Digital reaches an agreement with Toshiba that would benefit the Firm and the shareholders. This belief, along with the continued strong expected demand for storage, the further deleveraging of its balance sheet, and Western Digital’s modest valuation continue to make the shares highly attractive. As such, we maintain our Buy recommendation and $130 target price.”
TipRanks analytics showcase WDC as Moderate Buy. Based on 18 analysts polled by TipRanks in the last 3 months, 12 rate a Buy on the stock while 6 maintains a Hold. The 12-month average price target for Western Digital Corp stands at $113.25, marking a profit potential of nearly 31% from where the stock is currently trading.
Buys Texas Instruments Incorporated (NASDAQ:TXN)
In the third quarter, the Frenchman made a bullish move on Apple supplier and semiconductor stock TXN, with a 12.98% increase in shares. With this ramp up, the fund now owns shares valued at over $387 million.
Chipmaker Texas Instruments produces a wide range of analog and embedded chips for connected cars, industrial machines, wireless infrastructure, consumer electronics, enterprise systems, and other devices. Its diverse business mix of chips across multiple industries allows it to offset softer orders in one industry with stronger orders in another.
Wall Street expects TXN’s revenue and earnings to respectively grow 12% and 31% this year, fueled by rising demand for automotive and industrial chips along with its continuing shift toward 300mm production. Texas Instruments’ well-diversified business, higher margins, and more sustainable dividends are cited as the main reasons for making it a good bet for long-term investment.
Out of all the analysts who have rated the company in the past 3 months, 52% gave a Buy rating, while 48% remained on the sidelines. The average 12-month price target for TXN is $101.68, marking a 3.09% upside from current levels.
Sells Seagate Technology PLC (NASDAQ:STX)
For Q3, First Eagle Investment’s move was to pull back in Seagate Technology, reducing the stake by close to 34% down to $9.74 million. However, since the last SEC filing, these shares have gained nearly +17.82% in value.
Seagate reported first-quarter fiscal 2018 non-GAAP earnings of $0.96 per share and revenues of $2.63 billion. At the end of the quarter, STX participated in a Bain Capital led consortium. The consortium has entered into an agreement with Toshiba Corporation for the acquisition of Toshiba Memory Corporation. For this takeover scheduled for March next year, Seagate has committed $1.25 billion.
This participation will enable Seagate to enter into an agreement with Toshiba, per which the latter will provide Seagate with NAND supply, thereby helping in its innovation of hard disk drives (HDD), solid-state drives (SSD) and hybrid solutions.
Amit Daryanani from RBC Capital maintains a Sector Perform rating on Seagate to reflect depressed free cash flows, lack of gross margin upside, and potential HDD revenue challenges as a result of ramp up in NAND supply.
The majority of analysts are also sidelined on the stock. TipRanks shows STX has a Hold analyst consensus with 1 buy, 12 hold, and 2 sell ratings published in the last three months. Analysts are predicting a -2.33% downside for the stock, which is currently trading at $39.08.
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