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ikkyu2 (99.52)

Update: INTC

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January 23, 2012 – Comments (4) | RELATED TICKERS: INTC

In this space a few months ago you read some bullish pitches for Intel Corp (INTC.)  I stated that even if the corp didn't have any earnings increases for 5 years, it was fairly priced for that scenario, and paying a decent dividend.  I stated my thesis that I felt that scenario was too pessimistic and that it was in my opinion at least 15% undervalued.

Since then it's put out 2 quarterly beats of analysts' earnings expectations and the stock is up 34% from my 19.76 entry point.

Most of you can do math, and you understand that if I think a stock is 15% underpriced and then it goes up 34%, the situation has changed.  But for those of you who don't, I wanted to update you that I no longer have a strong conviction either way about Intel at this price.  I am holding my stake because I haven't particularly found a better place to put it, but if the only reason you bought it at 19.76 was because I told you to, then I'm telling you to sell it now.

4 Comments – Post Your Own

#1) On January 23, 2012 at 10:18 PM, rd80 (99.11) wrote:

Intel isn't the screaming buy it was back when you first pointed it out, but I'm not ready to sell any yet.

One big factor in its favor is the popularity of dividend paying stocks.  They've generally been bid up across the board and INTC is a real stand out.  There just aren't many companies with 3+% yield, below market PE, low payout ratio and a rock solid balance sheet.

From your Apr 26 blog:
But still.  P/E 10.  For a stock whose product was the single biggest driver of corporate productivity gains, 1970-2010?

After those earnings beats, the PE is still about 10.

That said, can't question locking in a nice gain. 

Congrats on the call and thanks for pointing it out last year - your blog pushed me to take a closer look and buy some.  It's done nicely - although I didn't get it quite as cheap as you did.

As mentioned - long INTC

 

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#2) On January 24, 2012 at 2:24 AM, ikkyu2 (99.52) wrote:

I still tend to think their 15nm architecture will set the world on fire, Russ, but that's not conviction about crazy undervalue, it's a prediction.

If the world of armchair analysts is right and the era of the microprocessor has really come to a close; or if ARM or AMD steals more of Intel's share, the medium term outlook could indeed be bleak and include dividend cuts and price drops. 

I don't really believe that, but I'm a lot less certain of that than I was 10 months ago that the price ceiling of 20 couldn't hold. 

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#3) On January 24, 2012 at 2:25 AM, ikkyu2 (99.52) wrote:

And: thank you and you're welcome!

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#4) On September 22, 2012 at 6:12 PM, ikkyu2 (99.52) wrote:

I should have sold the stock here.  I did not; instead I bought more, doubling my position size, at 27 and change.  Now, the stock is at 24 and change, and I am up about 1% on the entire stake.

That's an interesting result.  I was right that the stock was cheap; right that the stock became overvalued; but because of my actions, I failed to make any money on being correct.  BRK, of course, bought when I did, but they sold here.

Food for thought.

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