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

In this article we will analyze whether Intel Corporation (NASDAQ:INTC) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Intel Corporation (NASDAQ:INTC) was in 72 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 78. INTC has experienced an increase in enthusiasm from smart money of late. There were 66 hedge funds in our database with INTC holdings at the end of September. Our calculations also showed that INTC isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here).

Seth Klarman of Baupost Group

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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 website. Keeping this in mind we’re going to view the latest hedge fund action encompassing Intel Corporation (NASDAQ:INTC).

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

At Q4’s end, a total of 72 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from the previous quarter. On the other hand, there were a total of 58 hedge funds with a bullish position in INTC a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

The largest stake in Intel Corporation (NASDAQ:INTC) was held by Fisher Asset Management, which reported holding $1454.8 million worth of stock at the end of December. It was followed by Baupost Group with a $906 million position. Other investors bullish on the company included Millennium Management, AQR Capital Management, and 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, setting aside 9.74 percent of its 13F equity portfolio to INTC.

As one would reasonably expect, key hedge funds have jumped into Intel Corporation (NASDAQ:INTC) headfirst. Baupost Group, managed by Seth Klarman, assembled the most outsized 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 initiated a $63.9 million position during the quarter. The other funds with new positions in the stock are 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 similar to Intel Corporation (NASDAQ:INTC). These stocks are Abbott Laboratories (NYSE:ABT), Oracle Corporation (NYSE: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.

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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 (NYSE: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 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. Hedge funds were also right about betting on INTC as the stock returned 28.5% since the end of Q4 (through 4/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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