4. Intel Corporation (NASDAQ:INTC)
L2 Asset Management’s Stake Value: $1,234,000
Percentage of L2 Asset Management’s 13F Portfolio: 3.11%
Number of Hedge Fund Holders: 66
Intel Corporation (NASDAQ:INTC) is a multinational technology corporation based in Santa Clara, California. In addition to being one of the most significant semiconductor manufacturers in the world, Intel Corporation (NASDAQ:INTC) provides central processing units, microprocessors, integrated graphics processing units, motherboard chipsets, solid state drives, flash memory, and vehicle automation sensors.
In Q3 2021, L2 Asset Management held 23,155 Intel Corporation (NASDAQ:INTC) shares, worth $1.2 million, representing 3.11% of the hedge fund’s total 13F investments.
Intel Corporation (NASDAQ:INTC) published its Q4 results on January 26, posting earnings per share of $1.09, beating estimates by $0.18. Revenue for Intel Corporation (NASDAQ:INTC) dropped 2.23% year-over-year, coming in at $19.53 billion, exceeding estimates by $1.18 billion.
On January 26, Intel Corporation (NASDAQ:INTC) declared a $0.365 per share quarterly dividend, which is a 5% increase from the prior dividend of $0.347. The dividend is payable on March 1, to shareholders of record on February 7.
UBS analyst Timothy Arcuri lowered the price target on Intel Corporation (NASDAQ:INTC) on January 27 to $53 from $58 and kept a Neutral rating on the shares after its Q4 results and below consensus Q1 earnings guidance.
According to Insider Monkey’s Q3 database, 66 hedge funds were long Intel Corporation (NASDAQ:INTC), down from 78 funds in the preceding quarter. Seth Klarman’s Baupost Group is one of the leading stakeholders of Intel Corporation (NASDAQ:INTC), with 19.7 million shares worth almost $1.05 billion.
Here is what O’Keefe Stevens Advisory, Inc. has to say about Intel Corporation (NASDAQ:INTC) in its Q4 2021 investor letter:
“Intel Corp (INTC) – We originally purchased Intel in August 2020 due to the substantial FCF generated and $10B+ yearly in R&D and Capex invested over the past several years. The technology lead it once had was gone as competitors such as TSMC, AMD, and others in the CPU and Data Center group surpassed Intel. Even though Intel had years of business underperformance because of delays in releasing new products, we believed the amount of capital spent at the company would allow them to catch up and reclaim market share. We knew this type of turnaround, given the company’s size, was not going to be quick or easy. However, we believed the price offered more than compensated us for the risk of failing once again.
In January, Intel announced Pat Gelsinger as the new CEO. We were happy with the hire as Pat was Intel’s original CTO, helping Intel become the dominant player in the industry it once was. We became increasingly worried that Pat was not the right guy in the months and quarters following the announcement. Mr. Gelsinger appears to be viewing the world through rose colored glasses (though we do recognize the CEO is the heart and soul of the organization, so we understand to a certain extent why he talked the way he did). Intel’s FCF gave us some comfort that it could afford to continue investing in new products while repurchasing shares or making acquisitions.
In the most recent quarter, the company announced an ambitious spending plan. In 2022, Intel expects to spend between $25-$28B in capital expenditures plus another $15B in R&D, with the potential to spend more if an opportunity presents itself! The FCF cushion we once had is likely gone for the next few years as Intel bets the farm to return to a market-leading position. While the future for Semiconductors is very bright, and end markets such as Data Centers and Autonomous vehicles are growing rapidly, we worry about the potential ramifications should INTC’s investments prove to be ill-fated like the past decade. Understanding what INTC will earn next year is a challenge in and of itself. Thinking about what it could be in 3-5 years is likely nothing more than a guess. With our downside protection gone and uncertainty surrounding the business’s future, we decided to sell the position. We are long-term-minded and are willing to ride out short-term pain. However, when the facts change, we must update our prior views.”
