Taiwan Semiconductor Manufacturing Company Limited (TSM) Surged Following Strong Demand Conditions

Investment Environment - L1 Capital International Fund's fourth-quarter 2025 investor letter emphasizes the importance of valuation analysis for AI-focused investments, indicating that mere conviction in AI is insufficient for successful outcomes [1] - The year 2025 was characterized as a strong year for global stock markets, with the fund returning 2.2% net of fees, compared to 2.5% for the MSCI World Net Total Return Index in AUD [1] Fund Performance - For the year 2025, the fund achieved a return of 9.8% net of fees, while the benchmark index returned 12.4% [1] Key Holdings - Taiwan Semiconductor Manufacturing Company Limited (NYSE:TSM) is highlighted as a significant holding, with a one-month return of 14.90% and a 52-week gain of 52.29% [2] - As of January 14, 2026, TSMC's stock closed at $327.11 per share, with a market capitalization of $1.4 trillion [2] Company Insights - TSMC is recognized as the leading manufacturer of semiconductor chips for AI and mobile applications, benefiting from strong demand and industry-leading manufacturing capabilities [3] - The company has expanded its capacity in Taiwan and made significant investments in the U.S. and other international markets, with financial performance exceeding expectations [3] - Despite substantial share price outperformance, TSMC remains within the assessed fair value range and is a top 10 holding for the fund [3] Hedge Fund Interest - TSMC ranks 9th among the 30 most popular stocks among hedge funds, with 194 hedge fund portfolios holding the stock at the end of Q3 2025, an increase from 187 in the previous quarter [4]