Top Intel execs bought shares in February
The chief executive and chief financial officer of Intel Corp. (INTC) both bought Intel shares last month.
Robert Swan, CEO, bought more than 27,000 shares, shelling out $1.5 million. His total shareholdings now amount to almost $30 million.
George Davis, the CFO, bought a little over 9,000 shares, paying about $503,000. His total holdings of Intel stock are worth $4.7 million.
Intel has been a laggard lately, rising about 19% in the past year, while the Standard & Poor’s 500 Index has advanced almost 25%.
The knocks on Intel are that it remains too dependent on chips for desktops as opposed to mobile devices, and that it does its own manufacturing in the U.S., where labor costs are high, rather than farming the manufacturing out to Asia, as many competitors do.
Detractors also say that Intel’s chip design is less innovative than that of some younger, nimbler rivals, such as AMD and Nvidia.
In my judgment, each of these criticisms is a partial truth. But to my way of thinking, Intel’s stock price fully reflects the company’s weaknesses and doesn’t give it full credit for its strengths.
One of those strengths is scale. As the world’s largest semiconductor company, Intel has heft in purchasing and clout in recruiting talent.
The balance sheet is another strong point. Debt is only 45% of equity, which puts Intel among the top 10% of companies in that regard. In addition, Intel has nearly $24 billion in cash and marketable securities.
Too, Intel has a habit of raising dividends. It has increased its dividend in 14 of the past 15 years. That doesn’t make it a “dividend aristocrat,” an honorific reserved for companies that have hiked their payout 25 years in a row. But it’s still impressive.
Quidel
At Quidel Corp. (QDEL), a San Diego company that makes medical testing products, CEO Douglas Bryant bought 5,000 shares last month for about $826,000. His total stake in the company is worth about $75 million.
Quidel was (and is) a COVID19 play, and the stock is up 89% in the past year. However, it peaked in August 2020, when it briefly touched $300. It trades at about $151 now.
At eight times earnings, the stock seems reasonably priced to me. The average 12-month price target among the few analysts who give one is $280. The balance sheet is strong, with debt only 8% of stockholders’ equity.
Zuckerberg’s sales
Mark Zuckerberg, CEO of Facebook and the world’s fifth-richest man according to Forbes’s ongoing tally, continues his methodical selling of Facebook shares.
In the past 18 months, according to GuruFocus.com, Zuckerberg has made 138 sales, totaling 9.4 million shares. He has sold three quarters of his total holding, and has a little over three million shares left. I don’t think his sales reflect a negative view of the stock (I think they are mainly to fund charitable ventures), but I don’t recommend this stock.
In mid-2020, Alphabet had about 29% of the online advertising market, Facebook about 23% and Amazon.com about 8%, according to eMarketer. Facebook’s share had been rising, but I expect it will shrink as more and more companies crowd into the field.
Past results
For many years, I’ve written about buys and sells by corporate executives.
Of the 57 columns I’ve written about this topic, I can tabulate 12-month results for 47 columns – all those from 1999 through a year ago.
The 80 stocks I’ve recommended have beaten the S&P
500 by 2.9 percentage points, on average.
The 24 stocks I said to avoid, even though insiders were buying, have underperformed the index by 24 percentage points.
The 11 stocks where I noted insider buying but made no comment (or an ambiguous comment) beat the S&P by 16 percentage points.
Stocks where I pointed to insider selling have, paradoxically, beaten the index by two percentage points.
A year ago, I recommended continental Resources Inc.
(CLR) and Stewart Information Services Corp. (STC), on the basis of insider buying and for other reasons. They have returned 350% and 42.6% respectively, from March 9, 2020 – when the market was plunging because of the pandemic – through March 5, 2021.
Over the same period, the S&P 500 returned 42.3%.
Bear in mind that my column recommendations are hypothetical: They don’t reflect actual trades, trading costs or taxes.
These results shouldn’t be confused with the performance of portfolios I manage for clients. Also, past performance doesn’t predict future results.
Disclosure: I don’t personally have any positions in the stocks discussed today, but some of my clients own Intel and one owns Facebook.