Lam Research Corporation

(NASDAQ Global Select)
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Bullish +75

Why this $40-billion money manager likes Lam Research and Nvidia but sold Ryder System

AI-generated analysis

πŸ‘€ Arup Datta, head of global quantitative equity at Mackenzie Investments, manages approximately $40.1 billion in assets using a strategy that balances growth, value, and quality factors.

πŸ“ˆ His Mackenzie Global Equity Fund, Series F has returned 38.9% over the past year as of June 3, with a five-year annualized return of 17.9%.

πŸ’» The fund's top five holdings include Nvidia, Alphabet, Apple, Microsoft, and Amazon, reflecting a strong presence in technology companies.

πŸ€– Lam Research is held because it benefits from the AI cycle, showing strong growth and profitability despite an expensive valuation that has seen the stock rise about 300% this year.

🏦 Zions Bancorporation was purchased as a value buy with attractive metrics including net interest income pricing and a dividend yield of approximately 2.9%.

πŸ“‰ Nvidia remains a top holding because its fundamentals have grown significantly while the stock price has only risen about 15% so far this year, making it neutral on value.

πŸ”¬ The firm values Nvidia's heavy investment in research and development, which has led to successful outcomes like GPU servers, alongside strong free cash flow margins.

πŸš› Ryder System was sold after being bought at $198 per share in December and reaching $248 per share in mid-May, as the value opportunity had diminished.

πŸ“Š The manager describes his approach as nimble and benchmark-aware, aiming to outperform the MSCI World Index without taking large sector bets.

🎯 The investment philosophy focuses on stock picking across sectors like technology and financials rather than timing specific market trends or styles.

Bullish Signals
  • Lam Research Corp. (LRCX) is a top holding that has surged approximately 300% over the past year while maintaining strong growth and quality fundamentals.
  • The company is a major beneficiary of the AI cycle, supplying wafer fabrication equipment and services to the semiconductor industry.
  • Despite having an expensive valuation, Lam Research remains profitable and is viewed as very strong on growth by the investment team.
  • Nvidia Corp. (NVDA) remains one of the top holdings after being owned for over two years, with a stock price up about 15% so far this year.
  • Nvidia's fundamentals have grown significantly, and its heavy investment in research and development has led to successful outcomes like GPU servers.
  • The company demonstrates high quality through profitable free cash flow margins and strong return on equity metrics.
  • Mackenzie Investments' $5.1-billion Global Equity Fund, Series F, generated a 38.9% return over the past year as of June 3, according to Morningstar Inc.
Risk Factors
  • Lam Research Corp. (LRCX) trades at a slightly expensive valuation despite its strong growth and profitability.
  • The stock has already appreciated approximately 300% over the past year, reflecting high market expectations that could be difficult to sustain.
Full Analysis
Mackenzie Investments' senior vice-president and head of global quantitative equity, Arup Datta, discusses his firm's investment strategy and specific holdings in an interview with The Globe and Mail. Datta manages approximately $40.1 billion in assets and oversees the Mackenzie Global Equity Fund, Series F, which has returned 38.9% over the past year as of June 3. His quantitative approach balances growth, value, and quality metrics to mimic and outperform the MSCI World Index without taking large sector bets. Datta highlights Lam Research Corp. (LRCX) as a key holding that the firm has maintained for several years due to its strong growth and profitability, which benefit from the artificial intelligence cycle. Although he notes the stock's valuation is slightly expensive, reflecting its 300% gain over the past year, the company remains attractive for its quality and future growth prospects. He also praises Zions Bancorporation (ZION) as a value buy purchased in July of the previous year, citing its attractive net interest income pricing and 2.9% dividend yield, with the stock up about 30% over the past year. Nvidia Corp. (NVDA) is identified as one of the fund's top holdings, owned for over two years. Datta views Nvidia as neutral on value despite historical high valuations, noting that its fundamentals have grown significantly while the stock price has only risen about 15% this year. He points to Nvidia's heavy investment in research and development and strong free cash flow margins as indicators of quality. Conversely, Datta explains that he sold his position in Ryder System Inc. (R) in mid-May after buying it at $198 a share in December for its value metrics; the stock subsequently fell to about half its purchase price, prompting the sale to capitalize on better opportunities elsewhere.