Focus Capital Management released its fourth quarter 2024 investor letter, offering a glimpse into the fund’s performance and investment strategies.
The fund experienced a difficult quarter, returning -4.7% compared to the S&P 500’s +2.8%. This concluded a challenging year for the fund, which saw an overall return of -27.6% for 2024, a stark contrast to the S&P 500’s +25.5% gain over the same period.
In its Q4 2024 letter, Focus Capital Management highlighted Silicon Motion Technology Corporation (NASDAQ:SIMO). The company designs, develops, and markets NAND flash controllers used in solid-state storage devices.
On February 13, 2025, SIMO closed at $55.28 per share, with a market capitalization of $1.862 billion. The stock’s one-month return was 8.03%, though it had lost 20.14% of its value over the preceding 52 weeks.
Focus Capital Management’s letter included the following commentary regarding Silicon Motion:
“Silicon Motion Technology Corporation (NASDAQ:SIMO) designs and sells controllers which manage the NAND flash memory ubiquitous in modern computing. Wherever there is NAND flash, there must be a controller, often one from Silicon Motion. SIMO is an ADR (American Depository Receipt) trading on the NASDAQ. 2024 — Growth Across the Board: We just recently discussed at some length in our third quarter letter about Silicon Motion’s strengthening industry position, increasing market share, and growing revenue and margins.
Over 2024, revenue has grown 25%+, gross margin has expanded 500 basis points, and net income has about doubled. We will not repeat our points from there at length. We will simply suffice with saying that the future looks even brighter, with continued growth in their core market segments as well as significant growth from their entry into new market segments. Silicon Motion’s entry into the high-end PC market with their PCIe 5.0 controllers is off to a very strong start with major design wins. In fact, Silicon Motion has stated that based on their present design win pipeline, they expect to attain about 50% market share in the high-end PC segment over the next few years, from their present standing start. And their MonTitan enterprise controllers for AI and data centers have already garnered multiple Tier 1 customer wins, with more expected to come, in what is again a greenfield opportunity for the company…”
While acknowledging the potential of Silicon Motion, the article concludes by indicating a preference for AI stocks, believing they offer a greater potential for higher returns in a shorter timeframe.
