Taiwan fund manager questions TSMC stock value after Buffett’s Berkshire slashes big stake
- Derek Lin at Uni-President Asset Management says TSMC will struggle to improve return on equity as overseas expansion plans erode efficiency
- Fund manager has instead picked up more shares in E Ink Holdings for better value
A top Greater China fund manager is joining Warren Buffett in voicing concerns over Taiwan Semiconductor Manufacturing Co or TSMC, the world’s biggest contract manufacturer.
“I think it’s very challenging for TSMC to maintain return on equity (ROE) at current levels in five to 10 years,” Lin said in an interview. “Even though TSMC may slow the decline of ROE by charging premiums due to its leading technology, it is very difficult to completely offset the impact.”
His UPAMC Great China Fund ranks first among 144 stock mutual funds that invest at least US$200 million mainly in the Greater China region. The fund has gained 11.6 per cent annually for the past 10 years.
Lin considered topping up his TSMC holding earlier this year when its share price dropped below NT$500 (U$16.20). Instead, he bought more shares of E Ink Holding, which is among his top holdings.
The electronic paper has a dominant market position and a growth outlook that is not been fully priced in, he added. The stock has gained 22 per cent this year, while TSMC is up 11 per cent.