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* Strong supporter of mr. Warren Buffet's, mr. Benjamin Graham's and mr. Peter Lynch's approaches. * Used to be a generator of sustainable alpha before 2014, then went heavily against USD - that didn't work out well. ) Bio: Investor from CIS 2010-present: Asset Management at the most... More
  • Intel As A L-T Investment 0 comments
    Jan 31, 2013 12:18 PM | about stocks: INTC

    The time has come to Intel. I have been stunned by how splendid this company is for long-term investors.

    Intel, as it said, is the king of microprocessors market, which in charge of 15% of the market share. But the Samsung not a single company was able to cross 5% market share. Intel's technology is superior!

    General best thing about Intel is the ability of its team to preserve mighty corporate spirit and ability to conduct great management skills and thirst for innovations through chain of iconic CEOs and directors. Let's take for example David Perlmutter (executive VP) - he along holds part of Intel's patents, he is the creator i387 math coprocessor, and he had taken part in a various Intel's famous projects. So he is a very iconic person in IT-industry.

    Walking down to the figures:

    Intel makes enormous revenue - more than 53 billions, and neatly earns more than 11 billions a year, and 35-50% of NI goes into dividends. Assuming outstanding stocks decrease over years, due to regular repurchase operations, dividend yield now is about 4.25% and five year annual increase rate for dividend payments is 6.77%, that's why longer you stick with INTC the more you get every year.

    Yes, I know about storm in hardware producers market. But isn't it the best time to start picking solid gears for long-term value portfolio? Intel is mammoth that could keep the crown over decades. Think of everlasting Coca Cola's, IBM's, WMT's or J&J's domination on US market and overseas during decades. Intel can stand current storm and boost profits in future.

    R&D expenses are about 10 billions, as much as Kazakhstan spends on science (yes, I'm investor from Kazakhstan), and scarcely any company in industry spends more. Let's imagine how many breathtaking devices are still not invented or commercially used in our days, however we've seen a lot of them coming (in futuristic movies mainly). And pardon me if I'm wrong, I believe that partly science follows after inspiring ideas that come to us via fantastic books and movies. Scientist just embody what they saw there. 15 years ago as small smart and powerful devices as we have now, were just sci-fi.

    And I bet Intel, that directs up to 15% of revenue (5 year average) on Capex, has something special for us in its' very best laboratories. And thanks to "Innovation spirit" and ability to pass splendor over the years Intel is not "One man's" company. Besides, 70% of employees are purchasers of Intel's stocks. So this team of believers and hard-workers could lead further.

    Current Capex and A&D rates make me think that Intel's long-term asset base regenerates totally every 6 years.

    I'm buying now 30-40% of proposal amount, because it relatively cheap at the moment, come what may. And I'm going to buy rest during times of worries. Then it should be locked in portfolio for 2-4 years.

    If it going to make 4-5% dividend yield a year and 10-12% of price appreciation, annualized, than it's the deal.

    That's it.

    Thanks for reading.

    Disclosure: I am long INTC, NFLX, TSL, FSLR.

    Stocks: INTC
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