Best Stocks #2 (Small Cap): Universal Display (OLED)
Universal Display delivers state-of-the-art organic light emitting diode (hence the OLED stock symbol) technologies for flat-panel TVs, energy-efficient lighting systems and more. Holding more than 3,000 OLED device, architecture and material patents worldwide, the move from LED to OLED is underway and the stakes are high.
Thus, Universal Display’s stock dropped by almost 19% on Nov. 22 — the day of the patent news — before recovering more than half of those losses by the end of trading.
Discovery Capital Management — an $11.3 billion hedge fund run by Rob Citrone, a disciple of retired hedge fund manager Julian Robertson — is the largest holder of OLED stock with 6.9 million shares as of the end of September. Citrone first bought shares in the company in Q1 2011 picking up 2.1 million shares of OLED stock. Over a two-year period, he has increased his ownership by more than 200%.
Without getting into a performance analysis of Citrone’s fund, Discovery had $2.8 billion, according to its 13F, when it first bought OLED stock, and as of Q3 2013, that number had risen to $11.3 billion — a 300% increase. Some of that is additional money, but some of that is appreciation. (Albeit, at this point, OLED itself hasn’t made Citrone much.)
I don’t know what’s going to happen in six months, let alone 20 years. However, I do know that OLED plays in a very exciting space, and Discovery Capital still seems to agree. Financially, OLED stock is solid, and if things go the company’s way in the coming years, it should get big in a hurry.