BlackRock and Vanguard Are Betting on ON Semiconductor (ON) Stock

  • BlackRock (BLK) disclosed a 3.97 million share purchase of ON Semiconductor (ON).
  • Three days later, Vanguard disclosed a 10.17 million share purchase.
  • These buys come as shares of ON stock are down about 25% year-to-date.
ON stock - BlackRock and Vanguard Are Betting on ON Semiconductor (ON) Stock

Source: Shutterstock

Shares of ON Semiconductor (NASDAQ:ON) are in full focus following purchases from BlackRock (NYSE:BLK) and Vanguard. ON stock was a former favorite of billionaire Stanley Druckenmiller before he exited his position during the third quarter of last year.

Semiconductor stocks have been battered this year due to falling consumer demand and recessionary fears. Citi analyst Christopher Danely believes the worst is yet to come, predicting another 15% drop through the rest of the year. He explained:

“We believe this will be the worst downturn in at least a decade in semiconductors because of three aspects that have not existed for ten years – excessive valuation, excessive inventory build, and a recession.”

ON Stock: BlackRock and Vanguard Purchase Shares

According to a 13G filing received on July 8, BlackRock purchased 3.98 million shares of ON, increasing its existing position by 9.64%. After the purchase, the investment firm now owns a total of 45.24 million shares.

According to a 13G filing received on July 11, Vanguard purchased 10.17 million shares of ON, increasing its existing position by 25.32%. After the purchase, Vanguard owns a total of 50.34 million shares. It is now the largest shareholder of ON, while BlackRock comes in second.

BlackRock’s purchase is especially interesting, as it recently warned investors the rest of 2022 would be volatile for stocks. This is due to inflation and the subsequent actions of the Federal Reserve to raise interest rates. A scan of BlackRock’s June 13D/G transactions shows sales largely outnumbered buys by a wide margin. As a result, it seems BlackRock sees long-term — and possibly recession-resistant — potential for the semiconductor company.

In addition, the 13G filings imply BlackRock and Vanguard do not seek to influence the executive decisions of ON, instead taking passive positions.

Who Else Is Betting Big on ON Semiconductor?

Tracking institutional ownership is important, as these large funds provide liquidity and price support for stocks. During the first quarter, 686 funds reported owning ON, an increase of five funds from the prior quarter.

Meanwhile, the institutional put/call ratio lies at 1.06, up from 0.66 compared to Q4. This means more funds own put options against the company than call options, although just barely. With that in mind, let’s take a look at the top five shareholders.

  1. Vanguard: 50.34 million shares.
  2. BlackRock: 45.23 million shares.
  3. FMR: 33.6 million shares.
  4. Stripes Holdings: 30.96 million shares. Stripes’ position is accurate as of Q4 2021.
  5. Janus Henderson Group: 16.71 million shares.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.

Article printed from InvestorPlace Media,

©2022 InvestorPlace Media, LLC