Hedge Fund Darlings vs. Intel Corporation (INTC) In 2019

We are still in an overall bull market and many stocks that smart money investors were piling into surged in 2019. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 57% each. Hedge funds’ top 3 stock picks returned 44.6% this year and beat the S&P 500 ETFs by nearly 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Intel Corporation (NASDAQ:INTC).

Is Intel Corporation (NASDAQ:INTC) a cheap investment today? The best stock pickers are in an optimistic mood. The number of long hedge fund bets moved up by 15 recently. Our calculations also showed that INTC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).

According to most shareholders, hedge funds are seen as underperforming, outdated financial vehicles of yesteryear. While there are more than 8000 funds in operation at present, We choose to focus on the top tier of this club, approximately 750 funds. These money managers oversee most of the smart money’s total asset base, and by watching their top equity investments, Insider Monkey has revealed several investment strategies that have historically outperformed Mr. Market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

Kerr Neilson of Platinum Asset Management

We leave no stone unturned when looking for the next great investment idea. For example one of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock is still extremely cheap despite already gaining 20 percent. Keeping this in mind let’s take a peek at the key hedge fund action regarding Intel Corporation (NASDAQ:INTC).

How are hedge funds trading Intel Corporation (NASDAQ:INTC)?

At Q3’s end, a total of 58 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 35% from the previous quarter. The graph below displays the number of hedge funds with bullish position in INTC over the last 17 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Fisher Asset Management held the most valuable stake in Intel Corporation (NASDAQ:INTC), which was worth $1395.1 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $766.6 million worth of shares. Arrowstreet Capital, D E Shaw, and Platinum Asset Management 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 14.53% of its 13F portfolio. Platinum Asset Management is also relatively very bullish on the stock, earmarking 6.37 percent of its 13F equity portfolio to INTC.

Now, some big names have been driving this bullishness. Two Sigma Advisors, managed by John Overdeck and David Siegel, created the most valuable position in Intel Corporation (NASDAQ:INTC). Two Sigma Advisors had $96.4 million invested in the company at the end of the quarter. Mike Masters’s Masters Capital Management also made a $51.5 million investment in the stock during the quarter. The following funds were also among the new INTC investors: Donald Sussman’s Paloma Partners, Paul Marshall and Ian Wace’s Marshall Wace, and Renaissance Technologies.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Intel Corporation (NASDAQ:INTC) but similarly valued. These stocks are Chevron Corporation (NYSE:CVX), Wells Fargo & Company (NYSE:WFC), Merck & Co., Inc. (NYSE:MRK), and The Boeing Company (NYSE:BA). All of these stocks’ market caps are similar to INTC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CVX 48 1775593 4
WFC 62 25231139 -3
MRK 73 4568239 3
BA 78 3964531 4
Average 65.25 8884876 2

View table here if you experience formatting issues.

As you can see these stocks had an average of 65.25 hedge funds with bullish positions and the average amount invested in these stocks was $8885 million. That figure was $4800 million in INTC’s case. The Boeing Company (NYSE:BA) is the most popular stock in this table. On the other hand Chevron Corporation (NYSE:CVX) is the least popular one with only 48 bullish hedge fund positions. Intel Corporation (NASDAQ:INTC) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Unfortunately INTC wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); INTC investors were disappointed as the stock returned 29.4% in 2019 (as of 12/23) and trailed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 65 percent of these stocks already outperformed the market in 2019.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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