How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Intel Corporation (NASDAQ:INTC).
Intel Corporation (NASDAQ:INTC) shareholders have witnessed a decrease in hedge fund sentiment in recent months. Intel Corporation (NASDAQ:INTC) was in 66 hedge funds’ portfolios at the end of September. The all time high for this statistic is 83. Our calculations also showed that INTC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind we’re going to check out the new hedge fund action regarding Intel Corporation (NASDAQ:INTC).
Seth Klarman of Baupost Group
Do Hedge Funds Think INTC Is A Good Stock To Buy Now?
At third quarter’s end, a total of 66 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -15% from one quarter earlier. By comparison, 66 hedge funds held shares or bullish call options in INTC a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the most valuable position in Intel Corporation (NASDAQ:INTC). Fisher Asset Management has a $1.7308 billion position in the stock, comprising 1.1% of its 13F portfolio. The second most bullish fund manager is Seth Klarman of Baupost Group, with a $1.052 billion position; 9.7% of its 13F portfolio is allocated to the stock. Some other professional money managers that are bullish encompass David Blood and Al Gore’s Generation Investment Management, and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position MFP Investors allocated the biggest weight to Intel Corporation (NASDAQ:INTC), around 12.63% of its 13F portfolio. Baupost Group is also relatively very bullish on the stock, dishing out 9.66 percent of its 13F equity portfolio to INTC.
Since Intel Corporation (NASDAQ:INTC) has experienced declining sentiment from the aggregate hedge fund industry, we can see that there lies a certain “tier” of funds that slashed their full holdings heading into Q4. It’s worth mentioning that Panayotis Takis Sparaggis’s Alkeon Capital Management dropped the biggest position of the “upper crust” of funds followed by Insider Monkey, worth about $140.7 million in call options. Mikal Patel’s fund, Oribel Capital Management, also dumped its call options, about $67.2 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 12 funds heading into Q4.
Let’s check out hedge fund activity in other stocks similar to Intel Corporation (NASDAQ:INTC). These stocks are Abbott Laboratories (NYSE:ABT), PepsiCo, Inc. (NASDAQ:PEP), Accenture Plc (NYSE:ACN), Broadcom Inc (NASDAQ:AVGO), Costco Wholesale Corporation (NASDAQ:COST), Chevron Corporation (NYSE:CVX), and AT&T Inc. (NYSE:T). This group of stocks’ market values match INTC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ABT | 63 | 3611527 | 2 |
| PEP | 61 | 4435441 | -5 |
| ACN | 56 | 4460650 | 4 |
| AVGO | 50 | 2706386 | 3 |
| COST | 55 | 4393346 | 1 |
| CVX | 51 | 4442202 | 1 |
| T | 66 | 3212098 | -2 |
| Average | 57.4 | 3894521 | 0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 57.4 hedge funds with bullish positions and the average amount invested in these stocks was $3895 million. That figure was $6473 million in INTC’s case. AT&T Inc. (NYSE:T) is the most popular stock in this table. On the other hand Broadcom Inc (NASDAQ:AVGO) is the least popular one with only 50 bullish hedge fund positions. Intel Corporation (NASDAQ:INTC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for INTC is 66.9. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.6% in 2021 through November 30th and beat the market again by 5.6 percentage points. Unfortunately INTC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on INTC were disappointed as the stock returned -7% since the end of September (through 11/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Intel Corp (NASDAQ:INTC)
Follow Intel Corp (NASDAQ:INTC)
Suggested Articles:
- 10 States with the Cheapest Health Insurance
- 15 Countries With The Highest Corporate Tax Rates
- 30 Best Jobs for 18 Year Old College Students
Disclosure: None. This article was originally published at Insider Monkey.
