Was The Smart Money Right About Intel Corporation (INTC)?

After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of June 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Intel Corporation (NASDAQ:INTC).

Intel Corporation (NASDAQ:INTC) was in 78 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 83. INTC has seen a decrease in hedge fund sentiment recently. There were 83 hedge funds in our database with INTC holdings at the end of March. Our calculations also showed that INTC isn’t among the 30 most popular stocks among hedge funds (click for Q2 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 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Dan Loeb of Third Point

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. Recently we came across a high growth stock that has tons of hidden assets and is trading at an extremely cheap valuation. We go through lists like the 10 best growth stocks to buy 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. With all of this in mind we’re going to take a glance at the recent hedge fund action regarding Intel Corporation (NASDAQ:INTC).

Do Hedge Funds Think INTC Is A Good Stock To Buy Now?

At the end of June, a total of 78 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards INTC over the last 24 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

More specifically, Fisher Asset Management was the largest shareholder of Intel Corporation (NASDAQ:INTC), with a stake worth $1763.7 million reported as of the end of June. Trailing Fisher Asset Management was Baupost Group, which amassed a stake valued at $1220.8 million. Third Point, D E Shaw, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position MFP Investors allocated the biggest weight to Intel Corporation (NASDAQ:INTC), around 12.52% of its 13F portfolio. Pennant Capital Management is also relatively very bullish on the stock, setting aside 11.17 percent of its 13F equity portfolio to INTC.

Due to the fact that Intel Corporation (NASDAQ:INTC) has faced declining sentiment from the aggregate hedge fund industry, it’s easy to see that there is a sect of fund managers that slashed their entire stakes in the second quarter. Intriguingly, David Goel and Paul Ferri’s Matrix Capital Management sold off the largest position of the “upper crust” of funds monitored by Insider Monkey, worth an estimated $193.4 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund dropped about $109.9 million worth. These moves are interesting, as aggregate hedge fund interest fell by 5 funds in the second quarter.

Let’s go over hedge fund activity in other stocks similar to Intel Corporation (NASDAQ:INTC). These stocks are salesforce.com, inc. (NYSE:CRM), Cisco Systems, Inc. (NASDAQ:CSCO), Eli Lilly and Company (NYSE:LLY), Pfizer Inc. (NYSE:PFE), Oracle Corporation (NYSE:ORCL), Abbott Laboratories (NYSE:ABT), and AT&T Inc. (NYSE:T). This group of stocks’ market values resemble INTC’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 69 hedge funds with bullish positions and the average amount invested in these stocks was $4499 million. That figure was $6764 million in INTC’s case. salesforce.com, inc. (NYSE:CRM) is the most popular stock in this table. On the other hand Oracle Corporation (NYSE:ORCL) is the least popular one with only 55 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 49.9. 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. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 26.3% in 2021 through October 29th and beat the market again by 2.3 percentage points. Unfortunately INTC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on INTC were disappointed as the stock returned -12.2% since the end of June (through 10/29) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.