Lazard Fund Beating 93% of Peers Adds Samsung During Memory Rout

1i3xn(jy0z(r1qb1hi6sgq3d_media_dl_1.png Bloomberg

Article content

(Bloomberg) — The manager of a $9.6 billion Lazard Asset Management fund used the July plunge in Samsung Electronics Co. to add the stock to her portfolio for the first time in more than a year.

Article content

Monika Shrestha, who co-manages the Lazard Emerging Markets Equity Portfolio, is betting the memory-chip upcycle that fueled windfall profits at Samsung has room to run through 2028. Her fund beat 93% of peers over the past month and 98% over the last five years, according to data compiled by Bloomberg.

Article content

Article content

Article content

Samsung’s recent slide was “an opportunity to buy” at an attractive level, Shrestha said in an interview. While overcrowding and wild volatility have spooked investors on the AI theme, she sees the overall narrative of Big Tech spending fueling strong chip sales as still intact.

Article content

Article content

“Memory price increases will be slower, but the overall memory market still favors higher prices,” the fund manager said. “There’s no sign of demand in the hyperscaler capex slowing down.”

Article content

Shrestha said Samsung is “very much a bottom-up call,” noting the stock’s appealing valuations and high return on equity. Its projected ROE has surged to a record high of more than 50%, compared with about 35% for the Philadelphia Semiconductor Index of global chip peers.

Article content

Staying underweight tech relative to the benchmark MSCI Emerging Markets Index helped cushion Shrestha’s fund through the July rout. She trimmed SK Hynix Inc. after its sharp run-up and redeployed gains into energy firms including Petroleo Brasileiro and Vista Energy, Chinese consumer names and financials.

Article content

SK Hynix is still the fund’s second-largest holding, following Taiwan Semiconductor Manufacturing Co. The Lazard vehicle has more than 60% exposure to emerging Asia, with large allocations in China, Taiwan and South Korea.

Article content

The threat of stronger competition from Chinese memory makers including CXMT Corp. that rattled the AI trade in the past few weeks is a risk to pricing power longer term, Shrestha said. Nonetheless, she remains bullish on the memory theme and sees Samsung as good value.

Article content

Samsung’s stock is down 36% from its all-time high. But the share price remains nearly 230% higher than a year ago after frenzied investor buying of memory plays. 

Article content