3. Intel Corporation (NASDAQ:INTC)
Baupost Group’s Stake Value: $822 million
Percentage of Baupost Group’s Stake Value: 8.84%
Number of Hedge Fund Holders: 76
P/E Ratio: 6.29
Intel Corporation (NASDAQ:INTC) is a technology company that designs, develops and supplies computer hardware. This includes microprocessors, graphics processing units and motherboards etc. As of the first quarter of 2022, Baupost Group is the leading stakeholder in the company.
Intel has a P/E Ratio of just 6.29, a very impressive figure for a technology company. Its D/E Ratio is only 0.32 and the company has a Quick Ratio of 1.73 as of the first quarter of 2022. The company also beat consensus on earnings by $0.08, with an EPS of $0.87 in its Q1 results. It also outperformed revenue estimates by $29 million. All the metrics point to the fact that Intel is one of the safest stocks on the list of safe stocks to buy in 2022 according to Seth Klarman.
Intel has a consensus of ‘Hold’ based on 25 analyst ratings as of June 14. The consensus price target, on the other hand, is $53.17, implying 40% upside. On April 8, Truist analyst William Stein lowered his price target on Intel to $49 from $53 and kept a ‘Hold’ rating on the stock as part of a broader research note on Semiconductor industry. The analyst cites “hard evidence” of an abrupt negative shift in demand signals from a wide range of compute, consumer, and communications OEMs, pointing to negative growth and lower earnings multiples for the industry.
Intel was mentioned in Q1, 2022 investor letter by O’Keefe Stevens Advisors. This is what was said:
“Intel announced they are removing stock-based compensation from non-GAAP earnings in 2022 to report results aligning with semiconductor peers. This may seem like a reasonable thing to do as comparability between peers becomes easier. On the other hand, what exactly is the point of adjusted earnings? It is not to conform to some industry norm or because the management teams need to make performance metrics. The point of adjusting earnings is to present results in a light that more closely reflects the actual underlying performance of the business. That is, backing out expenses that might be one-time in nature, such as legal or fire expenses. First off, share-based compensation is an actual expense. Decreasing my ownership stake in a company without receiving any compensation is not free. If a company paid its employees in all stock, would they add back the entire SBC? What a margin profile that would be. Second, should a company be worried about reporting results similar to other companies? Every company is unique. Management should not waste time determining what expenses should be excluded. Run the business, don’t worry about adjusting the numbers.”
