4. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 66
Dividend Yield as of February 2: 2.98%
Discovery Capital Management’s Stake Value: $2,936,000
Intel Corporation (NASDAQ:INTC) announced a 5% increase in its dividend on January 26, to $0.365 per share. This increase marked the company’s 8th consecutive dividend growth, while its 5-year average dividend growth rate stands at 6%. According to analysts, Intel Corporation’s (NASDAQ:INTC) strong balance sheet and stable cash flow would result in further dividend growth in the coming years.
In Q3 2021, Discovery Capital Management held a stake worth roughly $3 million in Intel Corporation (NASDAQ:INTC), which represented 0.21% of its 13F portfolio. In January, Northland set a $62 price target on Intel Corporation (NASDAQ:INTC), while maintaining an Outperform rating on the shares, acknowledging the company’s Q4 earnings beat.
With stakes worth over $6.4 billion, 66 hedge funds tracked by Insider Monkey held positions in Intel Corporation (NASDAQ:INTC) in Q3. In comparison, 78 hedge funds held stakes in the company in Q2, worth $6.7 billion. Ken Fisher’s Fisher Asset Management was the company’s largest shareholder in Q3, owning shares worth over $1.7 billion.
O’Keefe Stevens Advisory Inc. mentioned Intel Corporation (NASDAQ:INTC) in its recently-published Q4 2021 investor letter. Here is what the firm has to say:
“Intel Corp (INTC) – We originally purchased Intel in August 2020 due to the substantial FCF generated and $10B+ yearly in R&D and Capex invested over the past several years. The technology lead it once had was gone as competitors such as TSMC, AMD, and others in the CPU and Data Center group surpassed Intel. Even though Intel had years of business underperformance because of delays in releasing new products, we believed the amount of capital spent at the company would allow them to catch up and reclaim market share. We knew this type of turnaround, given the company’s size, was not going to be quick or easy. However, we believed the price offered more than compensated us for the risk of failing once again.
In January, Intel announced Pat Gelsinger as the new CEO. We were happy with the hire as Pat was Intels original CTO, helping Intel become the dominant player in the industry it once was. We became increasingly worried that Pat was not the right guy in the months and quarters following the announcement. Mr. Gelsinger appears to be viewing the world through rosecolored glasses (though we do recognize the CEO is the heart and soul of the organization, so we understand to a certain extent why he talked the way he did). Intel’s FCF gave us some comfort that it could afford to continue investing in new products while repurchasing shares or making acquisitions.
In the most recent quarter, the company announced an ambitious spending plan. In 2022, Intel expects to spend between $25-$28B in capital expenditures plus another $15B in R&D, with the potential to spend more if an opportunity presents itself! The FCF cushion we once had is likely gone for the next few years as Intel bets the farm to return to a market-leading position. While the future for Semiconductors is very bright, and end markets such as Data Centers and Autonomous vehicles are growing rapidly, we worry about the potential ramifications should INTC’s investments prove to be ill-fated like the past decade. Understanding what INTC will earn next year is a challenge in and of itself. Thinking about what it could be in 3-5 years is likely nothing more than a guess. With our downside protection gone and uncertainty surrounding the business’s future, we decided to sell the position. We are long-term-minded and are willing to ride out short-term pain. However, when the facts change, we must update our prior views.”
