Identifying stocks before they rise is an elusive goal shared by many investors, but finding three stocks in one sector at the same time is an even more difficult task. Ocean Park, led by chief investment officer J. Denis Jean-Jacques, is looking beyond chipmakers such as his Nvidia and Advanced Micro Devices, which have already garnered a lot of attention, while also focusing on artificial intelligence. We have achieved this in the field. “We strive to find value opportunities in areas that people and businesses need and want,” Jean-Jacques said in a phone interview with CNBC, and has been taking a value approach for 25 years. he added. Using this strategy, he identified his three big winners: Eaton, Vertiv, and Super Micro Computer. All three companies are capitalizing on the AI boom without directly competing with the semiconductor giants. The investor said that instead, two companies are likely to play a key role in driving his AI transition, with a third, Supermicro, and his computers working closely with Nvidia. They say they will benefit from a strong relationship. ETN 1Y Mountain Eaton is benefiting from the AI boom. “Eaton has a dominant position in electrification,” Jean-Jacques said in a newsletter to shareholders last week. The company is focused on building and maintaining the power networks essential to the growing number of power and data centers required for the burgeoning AI industry. The International Energy Agency predicts that electricity demand from data centers, AI, and cryptocurrencies will double by 2026. Eaton’s stock price has largely lived up to that over the past 12 months. That’s when Ocean Park saw the value in stock. But that’s not necessarily the popular opinion. According to FactSet, 67% of analysts covering Eaton’s stock rate it a “buy” or “overweight.” The average price target is $324.51, implying an upside of about 3% from Tuesday’s closing price. VRT 1Y Mountain Vertiv specializes in infrastructure and cooling technology for the AI industry. Around the same time the fund acquired Eaton, Ocean Park also acquired Vertiv. Headquartered in the Columbus suburb of Westerville, Ohio, the company also builds power systems for data centers and cooling equipment that enables servers and other high-tech manufacturing plants to run efficiently. The stock price has increased more than 560% in the past year. Analysts surveyed by FactSet are overwhelmingly positive about the stock, with nearly all rating it a “buy” or “overweight.” The average price target of $89.06 suggests over 8% upside potential. SMCI Mountain 2023-07-14 This technology company benefits from his relationship with Nvida, located across the street in San Jose, California. Super Micro’s profits over the past year have been even more impressive. Ocean Park’s biggest winner. Jean-Jacques said he began acquiring shares in midsummer 2023. Since then, the stock is up his 717%. The stock is among the top performers on the S&P 500 index, with a 243% gain so far in 2024. The company was selected to participate in the index in March on behalf of Whirlpool. Super Micro is involved in several areas of the tech space, but it’s his close relationship with Nvidia, headquartered across the street in San Jose, California, that has caught investors’ attention. The company is a major Nvidia vendor that manufactures servers and other infrastructure, including “clusters” of servers, used to train generative AI models. Wall Street loves stocks, too. On Tuesday, Loop Capital analysts set a price target for Supermicro of $1,500. In addition, JP Morgan formally covered the stock with an “overweight rating” and a price target of $1,150, 25% higher than the current stock price. Having three stocks in your portfolio that perform like Eaton, Vertive, and Supermicro may be a once-in-a-lifetime event. Jean-Jacques said the firm has about 40 long positions in its largest fund, the Ocean Park Omaha Dislocation Fund. He aims to cap each investment at 3% to avoid over-investing in one area. Overall, the overall fund gain for Q1 2024 was 8.61% for him, while the S&P gain was 10.5% for him. But Ocean Park His Investments nearly tripled his HFRX Stock Hedge Fund Index over the same period. (Ocean Park investors have different share class fees, but a 1.5% management fee is common, according to the fund.) One of Jean-Jacques’ tests is the ability to increase returns. It is to “search for operational efficiency” in a company. Increase from 30% to 50%. He also seems to place importance on the skills of the management team. Jean-Jacques was a longtime investor in Honeywell, led by CEO Dave Cote. It was Cote’s role on the Vertex board that led to his decision to invest. Jean-Jacques also valued the ability to ask industry insiders simple questions, saying that asking the right questions often leads to successful investments.
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