Semiconductors: Fadeaway Passport – NVIDIA Corporation (NASDAQ: NVDA)

Fadeaway Move

"Fadeaway" is a known but quite difficult move in the game of basketball.

A fadeaway or fall-away in basketball is a jump shot taken while jumping backwards, away from the basket. The goal is to create spaces between the shooter and the defender, making the shot much more difficult to block. The shooter must have very good accuracy and must use more strength in a relatively short time. – Wikipedia

  Image results for fadeaway basketball

Michael Jordan was one of the most popular shooters of the fadeaway. Wilt Chamberlain, Patrick Ewing, LeBron James, Kobe Bryant, Hakeem Olajuwon, Dwyane Wade, Karl Malone and Larry Bird are some of the greatest of the time ("GOAT") who are also known to use this feature. It is no coincidence that those who took the fadeaway move to perfection are also those who make the GOAT list.

Similarly, in recent years, semiconductors have brought their fadeaway to perfection, creating more than enough space (aka profit margins) between them (vendors) and their "defenders" (customers), making the bounty much more difficult to "block".

Here is how good semiconductors have "played" during a period of 3 years before Q4 / 2018 (ie 9/30 / 2015-9 / 30/2018):

  Semiconductor shares total return over the course of a period of 3 years, 9/30 / 2015-9 / 30/2018

A few brief observations: [19659010] 1. Almost all the leading names exceeded the general market (S & P 500). Total return on Nvidia Corp. (NVDA), Advanced Micro Devices Inc. (AMD), Micron Technology Inc. (MU), Taiwan Semiconductor Manufacturing Co. Ltd. (TSM), Texas Instruments Inc. (TXN), Broadcom Inc. (AVGO) and Intel Corp. (INTC) was much better than SPDR® S & P 500 ETFs (SPY).

Only Qualcomm Inc. (QCOM) and NXP Semiconductors NV (NXPI) had underperformed the index. We focused on these two companies (along with AVGO) in " three musketeers ", our latest article.

2. With the exception of INTC, all names that exceeded SPY have exceeded the technology benchmark – Invesco QQQ Trust (QQQ).

3. Four companies – NVDA, AMD, MU and TSM – managed to surpass the iShares PHLX Semiconductor ETF (SOXX) benchmark. Only the first three managed to make it crucial.

The three semis that have surpassed most (during the 3-year period) – namely AMD, NVDA and MU – have played in some of our articles over the past 15 months. To wit:

If you haven't found this yet – we love semis. We believe this is past, present and future. It is difficult (and honestly makes no sense) to argue with the growth and potential here.

We like all three names – AMD, NVDA and MU – and we all own three.

Having said that, we do as AMD better, mainly because we see it as better to choose from a risk / reward perspective, but also because we see greater potential for AMD to shine in an already shining realm. If you put it differently, it will be easier for AMD to beat and perform than its main peers.

Source: Semis: It's not just who you want to play with but how you want to play the game (Part I), March 14th, 2018

In this two-part article, we focused on our favorite semis AMD, MU and NVDA.

At this point you can (understand) understand why we keep this trio and why AMD is our sunshine. [19659016] Like the three teens – the Spanish Plácido Domingo and José Carreras, and the Italian Luciano Pavarotti – created an incredible song group in the 1990s and early 2000s, we believe that the three semis create an incredible growth group in 2010 years and into 2020.

No tears, no fear and an O Sole Mio: AMD.

Source: Semis: It's not just who you want to play with, but how you want to play the game (part II), March 16, 2018

As you can see, we were spot on (already at the end of 2017, more details / evidence below) by picking AMD as ou r preferred semi in late 2017, and by dumping NVDA.

The same applies to reversing our long position in AMD to a short position, just before Q4 / 2018. This short position was closed on during Q4 / 2018 and we have not had any position in AMD since then. (To this week, more details below.)

The Fadeaway Mode

However, we remind you that "the shooter must have very good accuracy and must use more strength in a relatively short time."

Semis had the accuracy and strength, but it now seems that for many of them time and energy go out.

This is how the exact same list of companies transferred since Q4 / 2018 started and until now (closing price of 19/12/1919):

A quick observation: Only four names exceeded the general market (S & P 500), the technology

The total return on iShares PHLX Semiconductor ETF (SOXX), SPDR® S & P 500 ETF (SPY) and Invesco QQQ Trust (QQQ), and QQQ Trust (QQQ, XLK, VGT, FDN, IYW) benchmark ETFs since 10/1/2018 are better than Taiwan Semiconductor Manufacturing Co. Ltd., Micron Technology Inc., Qualcomm Inc., Advanced Micro Devices Inc. and Nvidia Corp.

Only Intel Corp., Broadcom Inc., NXP Semiconductors NV and Texas Instruments Inc. performed better than the references.

"Fadeaway Mode" is even better when we focus on the trio of NVDA, MU and AND.

Total return – last three years (through 3/13/2019)

The last three years have been nothing but the sky for the trio, although

AMD (TR of + 828%), NVDA (+ 431%) and MU (+ 241%) have left dust to all other benchmarks, either diversified (SPY, QQQ) or focused (SOXX, SMH):

  • iShares PHLX Semiconductor ETF (SOXX) + 114% [19659036] VanEck Vectors Semiconductor ETF (SMH) + 101%
  • SPDR® S & P 500 ETF (SPY) + 47%
  • Invesco QQQ Trust (QQQ) + 71%

Total Return – FY 2018

Nevertheless, if we look at 2018 on a standalone basis, including its d It was more of a mixed bag.

While AMD was able to finish the year as the best performance of the S & P 500, NVDA and MU will remember 2018 much less fondly.


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