We're Exiting This Semi-Cap Holding on Excess Capacity Concerns
Following the trade, the percentage of cash in the portfolio will be the highest it’s been in some time.
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| Symbol | Transaction Type | # Shares Traded | Recent Price $ | Shares Owned After Trade | % Portfolio |
|---|---|---|---|---|---|
AMAT | Sell | 970 | 143 | 0 | 0 |
After you receive this Alert, TheStreet Pro Portfolio will exit its position in Applied Materials AMAT, selling the remaining 970 shares at or near $143. This slug of AMAT shares returned a loss of about 15%.
Following our comments in this morning’s Daily Rundown video about growing concerns for excess chip industry capacity and the likely headwind for semiconductor capital equipment spending, we are exiting the portfolio’s position in Applied Materials. The concerns stem from a combination of a tariff-induced slowdown in auto production and data showing business investment spending is slowing, which points to incrementally more excess industry chip capacity.
As we see it, those storm clouds ahead are likely to keep AMAT shares at best rangebound, but more likely we could see AMAT move even lower as companies update their capital spending expectations in the coming weeks. Indeed, that, along with the growing risk of larger Trump tariffs being unveiled on April 2 than the president communicated last week, has us taking an even more defensive stance with the portfolio.
Following the trade, the percentage of cash in the portfolio will climb to more than 15%, and factoring in our inverse ETF holdings, our total defensive posture rises to ~18% of the portfolio’s assets. That is the highest it’s been in some time, reflecting the uncertainty in the market stemming from tariffs, the impact on inflation, and the likelihood that June-quarter earnings expectations are reset lower relative to current consensus expectations.
We will prudently navigate the coming days, and potentially the next few weeks, updating our thoughts and the portfolio as new information for tariffs, the economy, and prospects for Fed policy become available. As the landscape evolves, we will be looking for opportunities, but also be mindful of head fakes and look to avoid potential pitfalls.
(Please note that we are looking to execute these trades at or near the share price mentioned above. Once the trade is completed, subscribers can see the trade's executed price here. Be sure to toggle the chart to sort by Purchase Date.)
At the time of publication, TheStreet Pro Portfolio was long AMAT.
