So many things have never happened before. That's what's so amazing about this market. For instance, SanDisk is up 496%, Seagate is up 238%, Micron is up 208%, and Western Digital is up 171%. All four of these companies have been terrible and dangerous investments at times, but they now have long-term supply agreements that amount to what SanDisk calls the "New Business Model." They have all become more disciplined and are investing a large percentage of their profits back into stock buybacks.
SanDisk has a market cap of $244 billion, Seagate $220 billion, Western Digital $195 billion, and Micron $1 trillion. These companies, which now have significant market shares, should not be able to move their stocks with that much buying, but people believe their stocks are cheap.
This week, we bought a position in Micron because we believe that the discipline is real, even as Micron continues to build plants. However, I am nervous that these stocks have risen so much that it is uncomfortable to own them. Yet I believe these companies, which were once cyclical nightmares, can now become profitable.
