Top 5 Stock Picks of Legendary Value Investor Seth Klarman

3. Intel Corporation (NASDAQ:INTC)

Number of Hedge Fund Holders: 72

Percentage of Baupost Group’s 13F Portfolio: 9.17%

Baupost Group’s Stake Value: $928.9 million

Intel Corporation (NASDAQ:INTC) shares comprise 9.17% of Seth Klarman’s total portfolio according to 13F filings for the fourth quarter. The billionaire owned more than 18 million shares of the company at a price tag of $928.9 million. Hedge funds were also bullish on Intel Corporation (NASDAQ:INTC) during Q4 2021, where 72 hedge funds reported bullish bets on the company shares as opposed to 66 hedge funds a quarter ago.

On April 12, Citi analyst Christopher Danely maintained a ‘Neutral’ rating on Intel Corporation (NASDAQ:INTC) shares, and set a price target of $55, on the back of lower than expected growth in notebook shipments and his belief that PC sales could slow down in the second half of 2022.

For the fourth quarter, Intel Corporation (NASDAQ:INTC) reported earnings per share of $1.09, exceeding analysts’ forecasts by $0.18. $19.53 billion in quarterly revenue also outperformed estimates by $1.21 billion.

Here is what ClearBridge Investments had to say about Intel Corporation (NASDAQ:INTC) in its Q1 2022 investor letter:

“In the early days of the invasion, we made two measured changes to the portfolio based on longer-term fallout we anticipate from Russia’s invasion of Ukraine. We initiated a position in Intel (NASDAQ:INTC).

Over the last year, Pat Gelsinger, Intel’s new CEO, has devised a bold and aggressive strategy shift for the company. Gelsinger wants to open Intel’s factories to manufacture chips for competitors and thereby increase the utilization of Intel’s machinery. Doing so could increase the company’s returns and profits and bolster its competitive moat. While we admired these moves and saw their potential merit, we sat on the sidelines.

Intel’s repositioning requires tens of billions of dollars of increased investment and entails more risk than we are usually comfortable with. Russia’s invasion of Ukraine, however, changed our calculus. It revealed the fragility of the international order and drove home the importance of local manufacturing for critical industries like semiconductors.

Over several decades Taiwan has become the leading source for cutting-edge computer chips. With China determined to control Taiwan, this poses a critical strategic risk for the U.S. and the West. Concern over this threat has simmered for years but the war in Ukraine marks a boiling point. Indeed, just two weeks after Russia invaded Ukraine, Germany offered Intel over €5 billion in subsidies to build a plant in-country. We expect the U.S. will soon do the same. As Intel embarks on this new course, there is significant, long-term upside potential for the shares. This strategy entails meaningful risks, but at the $45 price we paid for our shares, we believe the risk/reward was asymmetrically skewed in our favor.”