Micron Technology, Inc. (NASDAQ:MU)’s stock is on a falling spree after its poor third quarter fiscal 2015 financial results. The semiconductor company has witnessed an 18.44% decline in its share prices in today’s trading session. What is even more worrying is that Micron Technology’s poor quarterly results have had a negative impact over the entire computer hardware industry, including Intel Corporation (NASDAQ:INTC), Seagate Technology PLC (NASDAQ:STX), and Western Digital Corp (NASDAQ:WDC). The shares of Intel Corporation are down in excess of 3.00%, whereas Seagate’s and Western Digital’s shares have declined by 2.96% and 3.51% respectively.
It has been a rough year for Intel Corporation (NASDAQ:INTC) and its stock has dropped by 15% year-to-date. In fact, the chipmaker has a notification on its investor relations page stating, “Intel is currently in a Quiet Period. None of the forward-looking statements in our April earnings press release, including in the Business Outlook section, should be considered as the current expectations of Intel.” The digital technology company mentioned lower PC demand crisis as the main reason for a slowdown before releasing its first quarter 2015 financial results in April 2015.
In market conditions such as these, the release of Microsoft Corporation (NASDAQ:MSFT)’s Windows 10 on July 29 could do the trick for the entire industry, although Intel’s CEO, Brian Krzanich, said earlier this year that the launch is unlikely to impact PC sales. For investors looking for the right opportunity to invest in the chipmaker, this might be the perfect moment to grab its shares at a discounted price. In addition to the upcoming Windows 10 launch, one should consider some more indicators before buying the stock, including insider activity and hedge fund sentiment towards the stock.
The launch of both Windows 10 and Skylake lineup in the upcoming months could change the financial picture of Intel Corp. Skylake is the next generation core processor family from Intel, which boasts better power efficiency and heightened IPC (Instructions Per Cycle) rating. Further, these events could help hedge fund managers capitalize on their existing positions, which we are going to discuss in the next section.
At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically delivered a monthly alpha of six basis points, though these stocks underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 144% and beating the market by more than 84 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise rather than large-cap stocks.
As of the end of March, 61 hedge funds hold long positions in Intel Corporation with an aggregate value of $5.21 billion, as compared to 62 funds a quarter earlier. In terms of insider activity, Brian Krzanich, Chief Executive Officer of Intel, sold the largest amount of shares, totalling 201,547 units at $32.61 apiece on June 3, 2015. However, the shares had been bought through the exercise of Employee Stock Options.
Among 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 $599.2 million position in the stock with 19.16 million shares, comprising 1.2% of its 13F portfolio. On Fisher Asset Management’s heels is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $380.3 million position with 12.16 million shares; the fund has 2.3% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish comprise Kerr Neilson’s Platinum Asset Management, Richard S. Pzena’s Pzena Investment Management and Cliff Asness’s AQR Capital Management.
Because Intel Corporation (NASDAQ:INTC) has witnessed declining sentiment from the smart money, we can see that there is a number of “hedgies” who disclosed closing their stakes in the last round of 13F filings. Among them is Michael Messner’s Seminole Capital (Investment Mgmt), which sold. 3.71 million shares and Matthew Hulsizer, PEAK6 Capital Management, which held previously held 880,500 shares.
With favorable conditions lining up for the company and a neutral hedge fund sentiment, we suggest buying shares of Intel Corporation (NASDAQ:INTC).
Disclosure: None
