Kyle Bass More Than Triples Investment in Tech to 46 Percent of Portfolio

Last quarter, Kyle Bass had 18 percent of his portfolio weighted in tech stocks. In the first quarter, that changed to 46 percent. The shift continues his trend of making large bets on a certain sector each quarter. In the third quarter of 2011 he was 46 percent in oil & gas, and in the fourth he was 55 percent in financials. An overview of Kyle Bass’ career and investment approach is here.
His top three new tech buys in the first quarter were: Alcatel Ads (ALU), MEMC Electronic Materials Inc. (WFR) and Tellabs Inc. (TLAB).
Bass bought 14,909,555 shares of Alcatel Ads (ALU) in the first quarter at an average price of $2.14, making it his largest holding at 23.6 percent of his portfolio. It is currently at $1.62 per share, near its 52-week low of $1.39 per share.
Alcatel builds next generation networks, delivering integrated end-to-end voice and data communications solutions to established and new carriers, as well as enterprises and consumers worldwide.
Alcatel Ads has a market cap of $3.9 billion; its shares were traded at around $1.63 with a P/E ratio of 5.1 and P/S ratio of 0.2.
Alcatel stock has plunged 71.3 percent over the last year. In the first quarter of 2012, Alcatel’s revenue dropped 12.3 percent year over year to $4.2 billion. Revenue fell 18% in its Networks segment, 25 percent in its Optics division, 29.5 percent in its Wireless division and 8.7 percent in the Wirelins division. Revenues for its IP division increased 23.5 percent with particular strength in the APAC and Americas regions, which both grew more than 30 percent year over year. Service providers in these areas are in the process of transforming their networks to all-IP. Sales of its next-generations Networks also increased 23 percent.
Bass bought 3,588,952 shares of MEMC Electronic Materials Inc. (WFR) at an average price of $4.35.

MEMC Electronic Materials Inc. is a global producer of polysilicon and silicon wafers. MEMC Electronic Materials Inc. has a market cap of $368.1 million; its shares were traded at around $1.7 with and P/S ratio of 0.1.
MEMC Electronic Materials stock has declined 83 percent in the last yearas it struggled with a challenging environment in both the semiconductor and solar markets. In May, Standard & Poor’s downgraded the company’s debt to junk status.
“The downgrade reflects our view that while the restructuring announced in December 2011 may deliver longer-run benefits to the company, cash flow will be negative in the first half of 2012 as the company works through the cash costs of shuttering its vulnerable solar materials business,” S&P said in a statement. “There is uncertainty as to whether solar panel installations and sale prices will support a stabilization of cash flows in a solar market that remains very challenging.”
The same day, MEMC acknowledged S&P’s action, saying in a statement: “”We are disappointed with the rating change by S&P,” commented Brian Wuebbels, MEMC’s Chief Financial Officer, “but we are comfortable that our cash and liquidity position is sufficient to meet our current cash needs. The credit downgrade by S&P today will not adversely affect our current access to our existing non-recourse construction revolver for SunEdison construction activities.”
MEMC’s revenue increased from $1.2 billion in 2009 to $2.7 billion in 2011, but the company suffered a loss of $1.5 billion in the fourth quarter of 2011 due to restructuring, impairments and other charges. Net loss for the first quarter of 2012 improved to $92 billion. Revenue in its Solar Energy segment declined 37 percent year over year to $303.2 million as the company moved away from selling solar wafers.