Am I missing something here – semicap trade?
I'm a fresh grad starting work at a HF soon (not mkt. neutral). When I was at a different fund in the Summer of 2024 I came across some interesting semicap names (PLAB, ACMR) that i convinced the PM to size full. And I kind of pitched it along the lines of constrained supply, US/China AI 'arms race'. Then late in 2025 I wrote a report on semicap subsystems manufacturers (UCTT, ICHR, AEIS), which also worked out. It seemed fairly obvious to me where the next constraint would be along the supply chain but it seems a little too simple for the market to not have recognized it sooner. Like did I just miss some bear narrative/3P data that ended up not panning out and just get lucky or is it really this easy to generate alpha?
I’m also still in college - I used to build computers when I was younger and remembered how HDDs were much cheaper than SDDs, so in early 2025 I began to wonder why people thought HDD demand wouldn’t be affected by A.I. data centers. I bought Seagate and the stock has pretty much 9x by now.
I could be totally wrong but from what I understand: a lot of semi stocks have massive floats and generalists who have very limited technical knowledge are setting the price. I really don’t understand how else people missed the booms for other components like memory and PSUs, anyone who knows anything about computers could see that the demand for those is directly correlated with GPU demand.
I’m sure there’s something big I’m missing so if anybody has some insight I’d love to hear it lol.
"is it really this easy to generate alpha?"
No, what made it work on the first set of trades (PLAB and ACMR) was they were under-covered, China-exposed names that most generalist investors avoided because of geopolitical noise. You made the correct call that demand would outweigh policy risk. Unless you completely ignored that altogether, that's not an "easy call" to make if you're trying to balance macro exposure across your book.
The supply chain work is more repeatable from a framework perspective since the big names usually re-rate first and then you propagate that through each layer up/down the stack. Sounds like you've done enough work to understand how the industry stitches together and were able to make a good assessment of where the demand trickles down.
It's good that you're asking "Did I get lucky?" since it's really easy to conflate skill with luck in a raging bull tech market. If I were you, I'd talk to that PM again and ask him how they sized it, whether they were underexposed to some of the risks, and what signals tell them the thesis has played out enough to exit. They're going to have a much more full picture of the trade within the context of the book composition vs. the narrow scope you can see with your analysis.
Tbh, your real test will come when a similar looking trade doesn't work and your PM is pressuring you to cut losses and you're trying to convince them to double down.
That's actually exactly what I pitched re:PLAB, ACMR. That's super helpful context. Happy to PM you the pitch (and others) in case you're interested and/or hiring!
Interested to see pitch also, thx
Could you dm me the pitch also?
Easy to get a few trades or themes correct. Hard to figure when to get in and out over a long period of time.
It’s hard to beat and index or run factor neutral.
Eg a lot of tech investors got super long software in 2021 then it blew up and people held too long. Everyone super long AI buildout looks like a genius. But when do you get out and size it.
I totally respect the market and know I have a lot left to learn but feel almost jaded at how easy it seems (since it's my first real cycle, if you can call it that). I worked on this company called TLN over the summer for my internship, up massively as well. Tbh, I didn't end up getting a return offer, and going to small-ish fund, so feel even more frustrated that I can get things on point and still lose out because of circumstantial stuff.
What do you mean? Did you lose out due to no headcount/fund losing money?
Create a more diversified portfolio or paper portfolio. Or trade your PA.
That’s where the real learning is
sell side is going to make so much money out of this
Wait, why?
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