Intel Corporation (INTC): Is It Worth Buying Now? Not Really, This Metric Says.

Intel Corporation (NASDAQ:INTC) was in 48 hedge funds’ portfolio at the end of December. INTC investors should pay attention to a decrease in activity from the world’s largest hedge funds recently. There were 50 hedge funds in our database with INTC positions at the end of the previous quarter. This is important to note because the stock is down slightly pre-market this morning, as Q1 earnings released yesterday after the close indicated an EPS miss of 1 cent. Let’s see what the smart money thinks.

If you’d ask most traders, hedge funds are viewed as underperforming, old financial tools of years past. While there are greater than 8000 funds with their doors open today, we look at the top tier of this group, close to 450 funds. It is widely believed that this group oversees the lion’s share of the smart money’s total capital, and by keeping an eye on their highest performing stock picks, we have unearthed a few investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 24 percentage points in 7 months (see the details here).

Just as important, optimistic insider trading activity is another way to parse down the marketplace. Obviously, there are plenty of incentives for an upper level exec to cut shares of his or her company, but only one, very simple reason why they would buy. Several empirical studies have demonstrated the useful potential of this method if investors know where to look (learn more here).

Now, let’s take a look at the key action regarding Intel Corporation (NASDAQ:INTC).

What have hedge funds been doing with Intel Corporation (NASDAQ:INTC)?

Heading into 2013, a total of 48 of the hedge funds we track were long in this stock, a change of -4% from the third quarter. With hedge funds’ capital changing hands, there exists a few notable hedge fund managers who were boosting their stakes significantly.

Of the funds we track, Jean-Marie Eveillard’s First Eagle Investment Management had the most valuable position in Intel Corporation (NASDAQ:INTC), worth close to $519.4 million, accounting for 1.9% of its total 13F portfolio. Sitting at the No. 2 spot is Jim Simons of Renaissance Technologies, with a $402.8 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Other peers that are bullish include Ken Fisher’s Fisher Asset Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Phill Gross and Robert Atchinson’s Adage Capital Management.

Seeing as Intel Corporation (NASDAQ:INTC) has witnessed a declination in interest from the smart money, we can see that there was a specific group of money managers that decided to sell off their entire stakes heading into 2013. At the top of the heap, Paul Ruddock and Steve Heinz’s Lansdowne Partners dropped the largest position of the “upper crust” of funds we track, totaling an estimated $160.8 million in stock.. Douglas W. Case’s fund, Advanced Investment Partners, also dropped its stock, about $14.5 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds heading into 2013.

What do corporate executives and insiders think about Intel Corporation (NASDAQ:INTC)?

Insider trading activity, especially when it’s bullish, is particularly usable when the company we’re looking at has seen transactions within the past six months. Over the last 180-day time period, Intel Corporation (NASDAQ:INTC) has experienced zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).

Let’s go over hedge fund and insider activity in other stocks similar to Intel Corporation (NASDAQ:INTC). These stocks are STMicroelectronics N.V. (ADR) (NYSE:STM), NXP Semiconductors NV (NASDAQ:NXPI), Avago Technologies Ltd (NASDAQ:AVGO), Maxim Integrated Products Inc. (NASDAQ:MXIM), and Texas Instruments Incorporated (NASDAQ:TXN). This group of stocks belong to the semiconductor – broad line industry and their market caps are similar to INTC’s market cap.

With the results exhibited by the aforementioned studies, everyday investors should always watch hedge fund and insider trading sentiment, and Intel Corporation (NASDAQ:INTC) is an important part of this process.

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