Were Hedge Funds Right About Intel Corporation (INTC)?

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.

Intel Corporation (NASDAQ:INTC) has seen an increase in hedge fund sentiment of late. Intel Corporation (NASDAQ:INTC) was in 83 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 78. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 72 hedge funds in our database with INTC positions at the end of the fourth quarter. Our calculations also showed that INTC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Ken Griffin of Citadel Investment Group

At Insider Monkey, we scour multiple sources to uncover 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 EV 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. Now let’s take a gander at the new hedge fund action regarding Intel Corporation (NASDAQ:INTC).

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

At Q1’s end, a total of 83 of the hedge funds tracked by Insider Monkey were long this stock, a change of 15% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards INTC over the last 23 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Ken Fisher’s Fisher Asset Management has the most valuable position in Intel Corporation (NASDAQ:INTC), worth close to $1.9325 billion, comprising 1.4% of its total 13F portfolio. The second most bullish fund manager is Baupost Group, led by Seth Klarman, holding a $1.4915 billion position; the fund has 11.9% of its 13F portfolio invested in the stock. Other peers with similar optimism encompass Cliff Asness’s AQR Capital Management, Ken Griffin’s Citadel Investment Group and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position MFP Investors allocated the biggest weight to Intel Corporation (NASDAQ:INTC), around 15.66% of its 13F portfolio. Pennant Capital Management is also relatively very bullish on the stock, setting aside 12.18 percent of its 13F equity portfolio to INTC.

Consequently, specific money managers have been driving this bullishness. Matrix Capital Management, managed by David Goel and Paul Ferri, assembled the largest position in Intel Corporation (NASDAQ:INTC). Matrix Capital Management had $193.4 million invested in the company at the end of the quarter. Leon Shaulov’s Maplelane Capital also initiated a $117.1 million position during the quarter. The following funds were also among the new INTC investors: John Hurley’s Cavalry Asset Management, Dmitry Balyasny’s Balyasny Asset Management, and Josh Resnick’s Jericho Capital Asset Management.

Let’s go over 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 ASML Holding N.V. (NASDAQ:ASML), Comcast Corporation (NASDAQ:CMCSA), Verizon Communications Inc. (NYSE:VZ), Exxon Mobil Corporation (NYSE:XOM), Netflix, Inc. (NASDAQ:NFLX), Adobe Inc. (NASDAQ:ADBE), and The Coca-Cola Company (NYSE:KO). This group of stocks’ market caps are similar to INTC’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 76.4 hedge funds with bullish positions and the average amount invested in these stocks was $11274 million. That figure was $7617 million in INTC’s case. Netflix, Inc. (NASDAQ:NFLX) is the most popular stock in this table. On the other hand ASML Holding N.V. (NASDAQ:ASML) is the least popular one with only 35 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 72. 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 25.8% in 2021 through August 6th and beat the market again by 6.7 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 -14.7% since the end of March (through 8/6) 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.

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