Broadcom’s Unique Model Warrants a Narrow Moat and Drives Substantial Cash Generation

Broadcom is the product of consolidation in the semiconductor and software spaces. Most prominent was the combination of Avago Technologies and Broadcom in 2016. Avago’s expertise in radio frequency filters for smartphones and legacy Broadcom’s dominance in networking, broadband, and wireless connectivity created a broad and profitable semiconductor behemoth. Recently, the firm has ventured into software in buying CA Technologies, Symantec's Enterprise business, and has a pending deal to acquire VMware. Longer term, we think Broadcom is part of the heavyweight class of technology leaders and boasts intangible assets around the designs of chips and software that go into a variety of end markets.