Insiders Have Been Buying at Intel, Fox

Executives may see value opportunities

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Sep 12, 2022
Summary
  • At under $32, Intel shares look good.
  • Fox news has a strong media portfolio.
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In the past few weeks, insiders have been buying their own shares at Intel Corp. (

INTC, Financial) and Fox Corp. (FOX, Financial).

Intel

Patrick Gelsinger, the chief executive officer at Intel (

INTC, Financial), spent just over half a million dollars to buy shares in August, bringing his stake to a bit over $7 million.

Raised in Pennsylvania farm country, Gelsinger left high school at 16 to attend Lincoln Tech in West Orange, New Jersey. At age 18, he began working at Intel as a quality-control technician. While working at Intel, he earned degrees from Santa Clara University and Stanford University.

At age 32, Gelsinger became the youngest vice president in Intel’s history. In 2001, he was named chief technology officer. He left Intel in 2009 to become president of EMC (

EMC, Financial) and later CEO of VMware (VMW, Financial). He returned to Intel as CEO in 2021.

I’ve been bullish on Intel for a while, not, and wrong so far. (Old Wall Street joke: What’s the difference between being early and being wrong? There isn’t any.)

At the recent price of less than $32, Intel shares look extremely good to me. They sell for less than seven times earnings, in a market where the average multiple is about 24. In my opinion, Intel shares have been punished too harshly for the company’s sins.

Those sins include a reliance on sales of personal computers, which are declining, as opposed to sales of mobile devices, which are increasing. The pandemic had something to do with that: Offices with rows of personal computers now sit half-occupied, giving companies little incentive to buy more PCs.

Investors are underestimating Intel’s strengths, I believe. It is the world’s largest manufacturer of logic chips (microprocessors). It has posted a profit in each of the past 30 years – yes, even including recession-scarred 2008 and 2020.

For investors who relish dividends, this stock should be particularly appealing. The dividend yield is 4.5%, and the company has increased the dividend in 14 of the past 15 years.

Fox

At Fox (

FOX, Financial), the parent of Fox News, insiders have both bought and sold shares this year.

CEO Lachlan Murdoch bought shares in August, bringing his total holding to about $26 million worth.

He is the son of Rupert Murdoch, who remains Fox’s chairman. The elder Murdoch sold most of his Fox stake last year. The Murdochs are also key figures in News Corp. (

NWSA, Financial), which owns a media empire including the Wall Street Journal, the London Times, Harper Collins and many others.

Personally, I do not like the political slant of Fox News, but I like the stock. It is selling for 16 times recent earnings and nine times the earnings analysts expect in the fiscal year that started in July.

In addition to Fox News, the company owns Fox Business, the Big Ten Network and 28 television stations. With its emphasis on breaking news and live sports, Fox can partially sidestep the problem of viewers’ fast forwarding through commercials.

The value of Lachlan’s stock holding in Fox is a bit above the $21.7 million he got by selling one of his homes in Los Angeles to actress Amanda Peet and her husband, writer/director David Benioff (creator of the "Game of Thrones" TV series). The sale occurred in 2020, but was reported only recently.

Fox earned $2.11 a share in the fiscal year that ended in June. For the fiscal year now in progress, analysts expect $3.51 a share – a nice jump.

The record

This is the 63rd column I’ve written about insider buys and sells. I’m able to tabulate one-year results for 53 columns – all those written from 1999 to September 2021.

A year ago, I recommended two stocks. Terminex Global Holdings Inc. (

TMX, Financial) gained 2.5% and Westlake Chemical Partners LP (WLKP, Financial) returned 16.7%. For comparison, the Standard & Poor’s 500 Total Return Index has declined 7.6%. I also noted insider selling at Trade Desk Inc. (TTD, Financial). It is down 6.1%.

Since 1999, my recommendations based on insider buying have beaten the S&P 500 by two percentage points per year. The stocks where I noted insider sales have trailed the index by 1.4 percentage points.

Stocks that I said to avoid, even though insiders had bought, have trailed the index by 24 percentage points per year. Stocks where I noted buying, but made no recommendation (or an ambiguous comment) have beaten the index by 19 percentage points.

Bear in mind that my column results are hypothetical and should not be confused with results I obtain for clients. Also, past performance does not predict the future.

John Dorfman is chairman of Dorfman Value Investments in Boston, Massachusetts. His firm or clients may own or trade the stocks discussed here. He can be reached at [email protected]

Disclosures

I/we have no positions in any stocks mentioned, and have no plans to buy any new positions in the stocks mentioned within the next 72 hours. Click for the complete disclosure
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