Skip to main content
Message Font: Serif | Sans-Serif
No. of Recommendations: 3
On the RM strategies board Otter asked for RM suggestions. Since I own this company anyway I ran the RMRanker on it (I try to do that periodically), and lo-and-behold, a top tier rule maker. The company is INTC. Yeah, the same INTC Bill sold recently. Anyway, here's a link to the ranker that I posted on the INTC board.

Obviously there is more than just the Ranker score to consider, but that was always the first cut to determine an eligible RM company.

Print the post Back To Top
No. of Recommendations: 1
Good post. I'm keeping INTC, MSFT, and CSCO as MY rulemakers despite TMFOtter selling those companies for the RM portfolio.

My other RMs are: DELL, PFE, SGP, JNJ, and NOK
I also have two RBs in that 10 stock port: SUBX and EBAY.

I will hold all ten for at least another year unless something really bad happens to one of more of these companies.
Print the post Back To Top
No. of Recommendations: 4
Nice work, 1poorguy.

This speaks to something that I have been trying to communicate. Whether or not I think a company is a Rule Maker is irrelevant.

I don't believe for a second that I have some lock on good investment ideas, so again, my decision to put Intel in (or sell it from) the port should not matter.

I LOVE the fact that you went right back and tore apart Intel again. I also like the use of the Ranker, which I agree is a great first cut tool. I've been monkeying around with it in the past few days and there isn't much that I'd change about it as a first cut tool.

Now, as for your thesis, I think you need to make your case on several different levels. First, Intel does have plenty of cash, but what do they DO with it? Intel pays a paltry dividend, they buy back some shares, and they reinvest in new and existing businesses. The first, in Intel's case, is too small to matter, the second is of minimal true benefit to outside shareholders, and the third is the real question.

One of my reasons for selling Intel is that their invested capital is being invested increasingly inefficiently. Any investment thesis in the company really must determine whether an environment where this happens STILL provides enough return from a cash flow perspective to make Intel a promising investment.

Bill Mann
Print the post Back To Top
No. of Recommendations: 0

Glad you liked it. Right now, what they mostly seem to be doing with the cash is surviving. AMD, their main competitor, is dying because they basically have no cash. Intel spent something like $7B last year on capital (new fabs, mostly).

What concerned me (and still does) is this:

Future growth may not be able to sustain the current price. That was the basis for this valuation post of INTC I made a while back:

Another factor, however, is that the semiconductor industry cycle is nearing bottom (who knows if it is there yet). One must recognize this is a cyclic industry. And one must also allow at least some premium for INTC given that Intel is the major player in CPU's, and no slouch in flash and communications chips.

For the record, I sold most of my INTC in the 30's based on valuation concerns. I just wish I had known more about valuation when it was in the 70's! :-(

1poorguy (still a small long position)
Print the post Back To Top
No. of Recommendations: 0

You got it dead-on. I was in the midst of working through a decade's worth of Intel data when you posted your comments. The first part of my results are posted here at . It clearly shows, in quantitative terms, the increasing inefficiency of Intel's investments. Invested capital tripling since 1998 (to the tune of $20 billion worth of investments) for hardly any change in revenue. Sure the business climate has a big part to play in the poor revenue showing, but on the other hand there is no evidence of Intel's investment wisdom.

Print the post Back To Top