There’s a sticker on millions of computers, maybe one on the computer you are using to read that says Intel inside. If not, there is Intel Corporation (INTC) inside this week’s insider buy with a purpose report.
All three Cs in our 3CP criteria, cluster buying, a change of heart and chunk buy(s) come into play with the INTC buying spree. (The P is for past performance.)
Cluster is when multiple insiders buy simultaneously. A quarter of directors and the Chief Executive Officer (CEO) bought more than 55,000 shares of the blue-chip tech company, totaling a touch over $2.7 million. (1)
Change of heart is when a habitual seller buys. Director Frank Yeary sold the semiconductor maker’s shares six times starting in August 2019 through January 2021, collecting more than $1.4 million. On October 25, 2021, Yeary had a change of heart and bought 10,000 shares at $49.96 for a little less than a half-million dollars. (2)
Chunk buys are at least six-figures. All buys of the chunk variety ranging from Director Risa Lavizzo-Mourey’s $247,500 to Director James Goetz’s $995,200. (1)
It’s easy to understand why the Intel insiders ran to the window to buy shares. The chip-maker reported earning and provided guidance that didn’t sit well with Wall Street. Earnings per share topped forecasts, sales missed expectations by a little more than 1%, but it was management’s forward guidance that spooked investors. (3) Team Intel outlined their business plans, saying spending will dampen profitability for the “next few years”. (4)
Analysts hated the report (5) and so did traders with shares crashing from October 21st’s close of $56 to as low as $47.88 just five days later. That’s when the Intel insiders pounced. In the past 52 weeks, INTC has traded as high as $68.49 and as low as $44.24. That puts current shares much closer to the 52-week low. As of this keystroke, the consensus one-year price target is $55.54, but that’s likely to change and possibly go lower, in our opinion. (6)
Outlook: Investors will want to pay attention to the 52-week low as it is an important support level. As long as shares stay to the good side of $44, then Intel shares have a chance to consolidate and regain their footing. If Wall Street takes INTC to a new low, then investors would be wise for the knife to stop falling before initiating new positions in the tech giant.
Insiders completing the 3Cs is encouraging as it’s a potential signal as to where they see value. However, it’s possible that both Wall Street’s negative view and the bullish stance of insiders could be correct. Analysts typically view things on a shorter horizon than executives.
It’s our view, Intel Corporation (INTC) could be in for some troubled trading in the short run but come into favor three-to-six months down the line.
INTC is appropriate for investors with average risk tolerance a long-term horizon, we’ll say at least two years. In the meantime, new shareholders will collect a dividend of 2.84% ($1.39 per share) as it stands now.
1 – https://www.secform4.com/insider-trading/50863.htm
2 – https://www.secform4.com/insider-trading/1458902.htm
3 – https://www.fool.com/investing/2021/10/22/heres-why-intel-shares-crashed-today/
4 – https://www.fool.com/investing/2021/10/22/heres-why-intel-shares-crashed-today/
5 – https://www.barrons.com/articles/intel-stock-price-downgraded-51635249770?siteid=yhoof2
6 – https://finance.yahoo.com/quote/INTC?p=INTC