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The Investor Earned Once-in-a-lifetime Returns by Looking Beyond Nvidia to Other Ai Stocks

April 18, 2024
minute read

Identifying stocks with potential before they soar is a challenging pursuit for many investors, but discovering three such stocks within the same sector simultaneously presents an even more formidable task.

Ocean Park Investments, under the leadership of Chief Investment Officer J. Dennis Jean-Jacques, has achieved this feat in the realm of artificial intelligence, diverging from the common focus on chipmakers like Nvidia and Advanced Micro Devices, which have already garnered significant attention.

In a recent telephone interview with CNBC, Jean-Jacques elucidated their investment approach: "We endeavor to pinpoint value opportunities in sectors essential to both individuals and corporations." This approach, honed over 25 years, has led to the identification of three significant winners: Eaton, Vertiv, and Super Micro Computer. These companies are strategically positioned to capitalize on the AI surge without directly competing with major chip manufacturers.

Jean-Jacques outlined the unique strengths of each company. Eaton, for instance, occupies a dominant position in the electrification sector, crucial for supporting the burgeoning AI industry's increasing power and data center demands. As forecasted by the International Energy Agency, the demand for power from data centers, AI, and cryptocurrency is set to double by 2026. Eaton's stock has nearly mirrored this trend over the past year, a testament to Ocean Park's recognition of its value.

Despite this, the consensus among analysts regarding Eaton's prospects differs. While 67% rate the stock as a buy or overweight, the average price target implies only a modest 3% upside from its current valuation.

Similarly, Ocean Park identified Vertiv, headquartered near Columbus, Ohio, as another promising investment opportunity. Vertiv specializes in building power systems and cooling devices vital for the efficient operation of data centers and high-tech manufacturing plants. With its stock soaring over 560% in the past year, analysts express overwhelmingly positive sentiments, foreseeing an 8% upside in the near future.

However, the most remarkable success story in Ocean Park's portfolio is Super Micro Computer. Acquired in mid-summer 2023, its stock has surged an astounding 717% since then, making it Ocean Park's most lucrative investment. Super Micro's close collaboration with Nvidia, particularly in manufacturing servers and infrastructure crucial for AI model training, has garnered significant investor attention. Wall Street analysts are bullish on its future, with price targets well above its current valuation.

Jean-Jacques acknowledges the rarity of having three stocks perform as spectacularly as Eaton, Vertiv, and Super Micro. Ocean Park's investment strategy involves maintaining a diversified portfolio, with no single investment exceeding a 3% cap to mitigate risks of over-exposure to a particular sector.

Despite Ocean Park's solid performance in the first quarter of 2024, Jean-Jacques remains vigilant, emphasizing the importance of operational efficiency and competent management. He attributes part of his success to his ability to ask pertinent questions to industry insiders, underscoring the significance of thorough research and due diligence in investment decisions.

Bryan Curtis
Eric Ng
John Liu
Editorial Board
Bryan Curtis
Adan Harris
Managing Editor
Cathy Hills
Associate Editor

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