While he may not enjoy the same name recognition as Warren Buffett, Philippe Laffont has an impressive track record. The multibillionaire investor grew up in France, attended the Massachusetts Institute of Technology, and is what the investing community refers to as a Tiger Cub -- someone who worked for Julian Robertson's Tiger Management hedge fund in the 1990s. Many Tiger Cubs went on to found hedge funds of their own and become billionaires.
Laffont founded venture capital and hedge fund Coatue Management in 1999, and made early investments in some companies that have become serious online players, such as Snap, Spotify, and TikTok-owner ByteDance.
The latest intrigue
Coatue's latest 13F filing with the Securities and Exchange Commission (SEC) shows it has been piling into an artificial intelligence (AI) stock-split stock that has been under intense scrutiny, and is on the sell list of some Wall Street analysts: Super Micro Computer (SMCI +0.06%).
But here's the catch: Supermicro must formally file its audited annual financial statements with the SEC by today's deadline to avoid delisting from the Nasdaq stock exchange.
So the question is: Does Laffont know something that the rest of Wall Street doesn't?
Playing contrarian
As of the end of December, Coatue Management held more than 8.8 million shares of Super Micro Computer -- a stake amounting to nearly 1% of its nearly $27 billion equities portfolio. At the end of the third quarter, the fund's Supermicro position had made up less than 0.1% of the portfolio.
It's been a wild and dramatic ride for Supermicro, which manufactures high-end servers for data centers, including some of the best hardware for supporting generative AI. Even after management conducted a 10-for-1 stock split at the beginning of October, Supermicro's market cap fell by nearly 27% during the fourth quarter.
For those unaware of the unfolding drama, it all started last August when financial research firm and short-seller Hindenberg released a report on Supermicro. That report alleged that the tech company was engaging in accounting fraud, including behaviors similar to those that the Securities and Exchange Commission (SEC) charged it with in 2020.
The company had previously inflated its revenues and underreported expenses. Among other things, Hindenberg (which has shut shop since) alleged that the tech company was up to its old tricks, and had rehired executives who had been involved in the prior scandal.
NASDAQ: SMCI
Key Data Points
Supermicro's CEO rebutted the Hindenburg report, saying it included "false or inaccurate statements" and "misleading presentations of information that we have previously shared publicly." However, Supermicro also delayed filing its annual report (that should have contained its audited financial statements for fiscal 2024 that ended on June 30) which it usually does by August, and was ultimately removed from the Nasdaq-100 index.
Earlier this month, the company said it would be able to file its delayed quarterly and annual reports with the SEC by Feb. 25, which means today is the last day to file its annual financial results, as well as provide an update on the first two quarters of fiscal 2025, to remain listed.
The company did report a preliminary earnings report for the second quarter of fiscal 2025 (that ended on Dec. 31, 2024) in the form of a current report, or 8-K filing. Following this report, the stock had an incredible run. While its adjusted earnings and revenue came in below expectations, management guided for $40 billion of revenue for fiscal 2026, way ahead of Wall Street analysts' consensus estimate.
However, the latest update should be taken with a grain of salt since that's unlikely to be audited, and its credibility will depend on whether Supermicro files the audited statements for fiscal 2024. Not surprisingly, the last three trading sessions have seen the stock lose more than 14% of its value. The company also revealed that it had received subpoenas from the Department of Justice and the SEC in late 2024 seeking certain documents relating to Hindenberg's report.
Street analysts are split on the matter. Seven research firms have issued reports on the company over the past three months, according to TipRanks. Three call the stock a buy, two call it a hold, and two say sell. The average analyst's 12-month price target, however, is more than 40% below where it was trading on Feb. 20.
Many largely raised their price targets following the positive update earlier this month, saying they had more confidence that management would submit regulatory filings by Feb. 25. However, analysts from JPMorgan Chase maintained an underweight rating on the stock, saying they needed more proof that Supermicro can hit management's "aggressive" fiscal 2026 guidance.
Laffont nailed the trade but risks remain
Buying Supermicro stock last year has paid off handsomely for Laffont and Coatue. The stock has more than doubled year to date. Today will be an important day for the company. If it does submit its delayed filings to the SEC, that could increase investors' confidence. It will be interesting to see if Coatue holds onto its position from here or takes its winnings.
Supermicro definitely provides products that are important to the growing AI industry, so if management can avoid further issues with regulators, the stock should do well. However, much uncertainty remains, including its 2026 guidance. I imagine the stock could stay volatile, so I wouldn't jump too deep into the stock just yet. But if the company can provide evidence that its regulatory issues are behind it and that its 2026 guidance is achievable, those would be signs that it could be time to increase your position.
