Is Intel Corporation (NASDAQ:INTC) a good bet right now? We like to analyze hedge fund sentiment before doing days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is Intel Corporation (NASDAQ:INTC) a buy here? Hedge funds are reducing their bets on the stock. The number of long hedge fund positions were trimmed by 3 lately. Our calculations also showed that intc isn’t among the 30 most popular stocks among hedge funds.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Cliff Asness of AQR Capital Management
We’re going to take a peek at the new hedge fund action regarding Intel Corporation (NASDAQ:INTC).
Hedge fund activity in Intel Corporation (NASDAQ:INTC)
Heading into the second quarter of 2019, a total of 62 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards INTC over the last 15 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
Among these funds, Fisher Asset Management held the most valuable stake in Intel Corporation (NASDAQ:INTC), which was worth $1171.3 million at the end of the first quarter. On the second spot was AQR Capital Management which amassed $853 million worth of shares. Moreover, Arrowstreet Capital, Citadel Investment Group, and Adage Capital Management were also bullish on Intel Corporation (NASDAQ:INTC), allocating a large percentage of their portfolios to this stock.
Seeing as Intel Corporation (NASDAQ:INTC) has faced a decline in interest from the smart money, logic holds that there exists a select few fund managers who were dropping their entire stakes by the end of the third quarter. At the top of the heap, Lee Ainslie’s Maverick Capital cut the biggest investment of the 700 funds tracked by Insider Monkey, valued at about $245.3 million in stock. John Hurley’s fund, Cavalry Asset Management, also dumped its stock, about $34.4 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 3 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Intel Corporation (NASDAQ:INTC). These stocks are Cisco Systems, Inc. (NASDAQ:CSCO), UnitedHealth Group Inc. (NYSE:UNH), Pfizer Inc. (NYSE:PFE), and Chevron Corporation (NYSE:CVX). This group of stocks’ market valuations resemble INTC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CSCO | 45 | 3154180 | -10 |
| UNH | 72 | 6223666 | -10 |
| PFE | 53 | 5290465 | -6 |
| CVX | 53 | 2167224 | 5 |
| Average | 55.75 | 4208884 | -5.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 55.75 hedge funds with bullish positions and the average amount invested in these stocks was $4209 million. That figure was $4308 million in INTC’s case. UnitedHealth Group Inc. (NYSE:UNH) is the most popular stock in this table. On the other hand Cisco Systems, Inc. (NASDAQ:CSCO) is the least popular one with only 45 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. 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 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately INTC wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on INTC were disappointed as the stock returned -16.2% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
