Patricia Perez-Coutts Taiwan Semiconductor MFG. TSM-N TOP PICK Sep 19, 2022

Checks all the boxes for his firm: big insider ownership, beautiful balance sheet, high FCF, high ROIC, decent valuation, gigantic moat. No one can do what it does. Overhang: what if someday China invades Taiwan? It would be bad not only for TSM, but also every AI-type company. Guiding for 20% compound growth over next 5 years.

His firm has always stayed away from semis, as they're very cyclical and easily disrupted (though this name seems more insulated). Capital intensive. He's on the fence, but feels overall that the better way to play AI is to own the Mag 7.

Shares will bounce and news will be good this week.

Didn't they say a few years ago they would build a plant in the U.S., but permitting, labour and other factors would make it costs 6x more. Trump is kidding himself that the most strategic Taiwanese company will move their IP of strategic importance to the US. Think about it. A great company and major beneficiary of AI. ETFs drive the valuation. 

Core holding in his global portfolio. Eaten INTC's lunch. Believes there's at least double-digit (10%) annualized upside over the next 5 years. Earnings will jump significantly this year with Arizona plant coming on stream. Growth over the next 2-3 years will be in the 15-20% annualized range.

Companies like NVDA must use TWM.

Undisputed leader in leading-edge foundries, and it's been that way for several years. Has anything changed? Now branching out to the US, which gives geographic diversification. This may be costly, but it has pricing power. 

Another reason it's done well is because competitors have done poorly. But INTC is getting its act together, and Samsung will at some point. Down the road (and it may be a long road), there will be some additional competition. But TSM will still be the leader. A staple in most growth portfolios.

His choice in the space. It makes the chips for NVDA and a whole slew of others. It's more diversified. Valuation is cheaper. Much clearer growth path going forward over next few years.

NVDA has fallen, but it's not a cheap stock. Factored into the share price is a huge growth expectation. Just because share price has fallen on a high flyer, that doesn't necessarily make it cheap.

Many feel this is am Nvidia proxy, that if NVDA is strong, TSM flies. But this hasn't been true in the last couple quarters. Listen to their call only to get a sense on the semis space.

All chips flow through this name, no matter who's designing them in the future. Aside from its being in Taiwan, less risk than other chip companies. Growth profile is quite good. Valuation significantly lower than NVDA.

Incredible company, has a huge edge, run incredibly well. Tariffs are the main issue pressuring the stock. Potential for China to take over Taiwan is an overhang. Great time to buy if you can wait it out, as he expects more volatility.

Offers you what INTC can, but without the risk.