Intel (INTC) has been a costly stock for long term investors

Posted By on July 18, 2013

INTC_holdingfor13years

Intel (INTC) has been a core “buy and hold” technology stock for many independent investors over the past decade or so, but a long hard look at returns makes that strategy puzzling. Back in the day, if you wanted to be in “technology,” INTC was a must have stock, particularly if you believed in personal computer and the silicon microchip. They are the undisputed leader in micro-processor business and when it comes to cutting end technology and microchip manufacturing, there are no better companies. Intel dominates as a supplier and in their ability to market products, but they have failed when it comes to being profitable investment for shareholders.

When it comes to returning value to long term shareholders including the dividend (which has improved in recent years), management has done a pitiful job. About the only positive I’ve heard is that they haven’t lost money for shareholders like a couple other large cap tech stocks. Unfortunately, I have been one who has held onto hope that the board of directors and management would hear my plea to work on giving us a reasonable return on our investment. For me, INTC has been one of my long core portfolio stocks and my first purchase started at $47 thirteen years ago. I continued to added to my position over the years INTCafterhours130717and even sold a few as the price bumped up and down. BUT … after their call on Wednesday, I have finally decided that the returns are not adequate. We investors put our dollars at risk and should at least see some growth in 13 years.

The afterhours move on Wednesday (7/17/2013) was the icing on the cake. INTC dropped 3.5% to 23.30 on flat sales and a lowered forecast. This is one roller coaster ride (see up and down chart above) that has returned me to the same place year after year — I want to get off. I’m done.

Investing in Intel (not actively managed/traded) – INTC looks like this:

  • Ten buys over 13 years with a dollar cost average of $23.51 which is a frustrating 21 cents higher than where the stock is currently trading.
  • Dividends for held shares over the same time amounted to about 2% per year … about the same as what a U.S. Treasury investment would have mustered. (for the record, the dividend for INTC is current better than Treasuries)

My advice for those of you who must own Intel, is to just trade the stock. Buy it at $20 and sell it when it hits $25 or higher if you are more confident. It’s a pretty simple trade. From my very quick analysis, trading INTC could have conservatively generated a 25% return six times in 13 years (excluding any captured dividends) … this would have averaged out to roughly a 13% return annually verses an investors 2% buy and hold strategy. Why buy and hold INTC???

UPDATE: Checking regular hours trading for Intel on Thursday follow the earnings news has INTC trading below $23.20.

Comments

Desultory - des-uhl-tawr-ee, -tohr-ee

  1. lacking in consistency, constancy, or visible order, disconnected; fitful: desultory conversation.
  2. digressing from or unconnected with the main subject; random: a desultory remark.