In this article we will check out the progression of hedge fund sentiment towards Intel Corporation (NASDAQ:INTC) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Intel (INTC) stock a buy or sell? Investors who are in the know were buying. The number of long hedge fund bets increased by 6 lately. Intel Corporation (NASDAQ:INTC) was in 72 hedge funds’ portfolios at the end of December. The all time high for this statistic is 78. Our calculations also showed that INTC isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Seth Klarman of Baupost Group
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage (or at the end of this article). With all of this in mind we’re going to take a look at the latest hedge fund action surrounding Intel Corporation (NASDAQ:INTC).
Do Hedge Funds Think INTC Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 72 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in INTC over the last 22 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ken Fisher’s Fisher Asset Management has the number one position in Intel Corporation (NASDAQ:INTC), worth close to $1.4548 billion, amounting to 1.1% of its total 13F portfolio. On Fisher Asset Management’s heels is Seth Klarman of Baupost Group, with a $906 million position; 8.4% of its 13F portfolio is allocated to the stock. Other professional money managers that are bullish consist of Israel Englander’s Millennium Management, Cliff Asness’s AQR Capital Management and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position MFP Investors allocated the biggest weight to Intel Corporation (NASDAQ:INTC), around 15.1% of its 13F portfolio. Shelter Haven Capital Management is also relatively very bullish on the stock, designating 9.74 percent of its 13F equity portfolio to INTC.
With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Baupost Group, managed by Seth Klarman, assembled the biggest position in Intel Corporation (NASDAQ:INTC). Baupost Group had $906 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $63.9 million investment in the stock during the quarter. The following funds were also among the new INTC investors: Rob Citrone’s Discovery Capital Management, Brandon Haley’s Holocene Advisors, and Dan Loeb’s Third Point.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Intel Corporation (NASDAQ:INTC) but similarly valued. We will take a look at Abbott Laboratories (NYSE:ABT), Oracle Corporation (NASDAQ:ORCL), AbbVie Inc (NYSE:ABBV), Cisco Systems, Inc. (NASDAQ:CSCO), Thermo Fisher Scientific Inc. (NYSE:TMO), Broadcom Inc (NASDAQ:AVGO), and Exxon Mobil Corporation (NYSE:XOM). This group of stocks’ market values are similar to INTC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ABT | 64 | 4303482 | 2 |
| ORCL | 52 | 2450210 | -4 |
| ABBV | 83 | 6965013 | 1 |
| CSCO | 60 | 4974309 | 1 |
| TMO | 89 | 5470797 | 9 |
| AVGO | 59 | 3342445 | 0 |
| XOM | 63 | 2208617 | 11 |
| Average | 67.1 | 4244982 | 2.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 67.1 hedge funds with bullish positions and the average amount invested in these stocks was $4245 million. That figure was $5579 million in INTC’s case. Thermo Fisher Scientific Inc. (NYSE:TMO) is the most popular stock in this table. On the other hand Oracle Corporation (NASDAQ:ORCL) is the least popular one with only 52 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 64.7. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7% in 2021 through March 12th and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on INTC as the stock returned 27% since the end of Q4 (through 3/12) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
