What Makes SiTime Corporation (SITM) an Attractive Investment Bet?
Baron Funds, an investment management company, released its “Baron Discovery Fund” first quarter 2023 investor letter. A copy of the same can be downloaded here. The fund was up 11.20% in the first quarter compared to the Russell 2000 Growth Index’s return of 6.07%. The strong performance of holdings in the Information Technology (IT), Industrials, and Consumer Discretionary sectors and the Fund’s higher exposure to the top-performing IT sector led the fund to outperform in the quarter. In addition, please check the fund’s top five holdings to know its best picks in 2023.
Baron Discovery Fund highlighted stocks like SiTime Corporation (NASDAQ:SITM) in the first quarter 2023 investor letter. Headquartered in Santa Clara, California, SiTime Corporation (NASDAQ:SITM) is a silicon timing systems provider. On May 15, 2023, SiTime Corporation (NASDAQ:SITM) stock closed at $85.39 per share. One-month return of SiTime Corporation (NASDAQ:SITM) was -29.52%, and its shares lost 56.96% of their value over the last 52 weeks. SiTime Corporation (NASDAQ:SITM) has a market capitalization of $1.874 billion.
Baron Discovery Fund made the following comment about SiTime Corporation (NASDAQ:SITM) in its Q1 2023 investor letter:
"We initiated a position in SiTime Corporation (NASDAQ:SITM), a fabless semiconductor company that designs and sells microelectromechanical systems (MEMS) timing solutions across various industries including consumer, communications, data center, automotive, and industrial. The company was founded in 2005 to commercialize its proprietary MEMS-based timing solutions and today remains the only company deploying MEMS-based solutions at scale and holds significant market share, beating out several competitors who were unable to get the technology to work. Timing devices are the heartbeat of electronic systems, delivering accurate, stable, and regular signals serving as a reference for all digital components within the system. Timing devices can cost as little as a few pennies, but without them electronic devices would not function. Historically these devices were made from quartz crystals, which today still make up the vast majority of the timing industry. But MEMS-based solutions offer several benefits in many applications, including a smaller form factor, programmability, robustness in harsh conditions, and a resilient supply chain, that is leading to adoption across a wide range of applications. SiTime sells its product at premium pricing and is generally sole sourced, specifically choosing to sell to customers who value MEMS differentiation and capabilities.
SiTime expects its served market to grow from $1 billion in 2022 to $4 billion in 2024 through new product introductions and underlying market growth, with key applications in 5G communications, data center computing and communications, automotive, and aerospace/defense driving a large majority of the growth. The company is targeting a 30% revenue growth rate from both existing and new customers and application penetration, with several industry leaders already adopting MEMS-based solutions and many more expected to follow suit. Given its fabless operating structure and premium product, the company delivers top-tier gross and operating margins. We believe MEMS-based timing adoption will continue to grow rapidly from new applications requiring the benefits of MEMS over quartz-based solutions and from SiTime continuing to develop new solutions addressing increasing parts of the underlying market, creating a pathway for high growth through at least the end of the decade."
SiTime Corporation (NASDAQ:SITM) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 21 hedge fund portfolios held SiTime Corporation (NASDAQ:SITM) at the end of the fourth quarter which was 23 in the previous quarter.
We discussed SiTime Corporation (NASDAQ:SITM) in another article and shared Ave Maria Growth Fund's views on the company. In addition, please check out our hedge fund investor letters Q1 2023 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
