Berkshire Sells its Intel – Other Value Managers Load Up

Berkshire Hathaway (BRK.B) reported that it completely sold out of its stake in Intel (INTC) in the second quarter. That sale generated a nice profit in a short time. The Intel investment -- believed to be the handiwork of Todd Combs, one of Warren Buffett’s two investment lieutenants -- was purchased in the third quarter of 2011.

INTC Chart

INTC data by YCharts

There’s no official word why Berkshire dumped Intel. But it’s not as if Intel is raising red flags from a valuation standpoint. YCharts Editor Dee Gill recently enumerated plenty of reasons to think Intel has plenty of competitive mojo-and a nice 3.4% yield to boot.

Moreover, while Berkshire was booking its profits in Intel in the second quarter, some value maestros were buying Intel. Michael Price, chief of hedge fund MFP Investors boosted his Intel stake in the second quarter by nearly 25%. It is now the fund’s second largest position, representing more than 5% of assets. (For those of you who weren’t investing way back in the ‘80s and ‘90s, Price was one of the most successful value investors, guiding the Mutual Series funds to one of the best records before selling the firm to Franklin Resources.)

Donald Yacktman, lead manager of the $6.5 billion Yacktman Focused mutual fund bought 2.3 million shares of Intel for his asset management firm in the second quarter. It was a new position for Yacktman’s firm. Yacktman only gets interested in stocks with a strong free-cash-flow story selling at a compelling valuation, based on a slender PE ratio.

INTC Free Cash Flow TTM Chart

INTC Free Cash Flow TTM data by YCharts

It’s not exactly hard to see why Intel got Yacktman’s attention. There’s also plenty to catch the eye of income-seeking investors.

INTC Dividend Chart

INTC Dividend data by YCharts

That chart suggests Intel can keep churning out the dividend hikes for a stock that currently offers a dividend yield nearly double the rate of the 10-year Treasury.

Carla Fried is an editor for the YCharts Pro Investor Service which includes professional stock charts, stock ratings and portfolio strategies.



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