Naveen Jeereddi of Jeereddi Partners presented his in-depth investment thesis on Micron Technology (US: MU) at Best Ideas 2019.
Micron Technology is a global manufacturer of dynamic random access memory chips (DRAMs), flash memories (NANDs), semiconductor components, and other memory modules for the computer industry. Micron trades at less than 4x LTM earnings and EBIT.
The memory industry is a profitable oligopoly (consisting of three DRAM players and six NAND players) characterized by short pricing cycles of memory products and strong secular demand trends including cloud computing, mobile devices, artificial intelligence, gaming platforms, autonomous vehicles, and the internet-of-things applications.
Micron has an ~$40 billion market capitalization with no debt and has been a public company for many decades. Micron investors, having experienced tremendous cyclical feast-or-famine swings in the past, possess a reflexive distaste for Micron in down cycles, resulting in a bargain valuation for the business on multiple metrics.
Micron’s industry supply and demand structure have vastly improved over the last few years. The industry has consolidated on the supply side with more rational profit-oriented players. Demand has exploded and diversified with new sustainable long-term secular drivers. Barriers to entry are higher (and increasing) due to the complexity and capital intensity of the sector.
Management is owner-oriented and has implemented an aggressive accretive share buyback program.
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About the instructor:
Naveen Jeereddi is CEO and portfolio manager of Jeereddi Investments LP. He has approximately two decades of value-oriented experience financing, analyzing, and investing in public and private companies. Also, he has extensive portfolio and risk management experience. Naveen has served in value investment roles at Donaldson, Lufkin & Jenrette, Onex Corporation, The Baupost Group L.L.C., and Tala Investments LP. He currently serves on the boards of directors of Chandler Global PTE Ltd, XPRS Capital LLC, and iDream Media Inc. He earned an MBA with distinction from the Harvard Business School and a BBA with high distinction from the University of Michigan. Naveen lives in Los Angeles with his wife, Amy, and their four children.