Wealthy entrepreneur Ken Griffin Expanded His Shares in a Specific Artificial Intelligence (AI) Chipmaker Company's Stock by an Impressive 172% (It's Not Nvidia)

Wealthy entrepreneur Ken Griffin Expanded His Shares in a Specific Artificial Intelligence (AI) Chipmaker Company's Stock by an Impressive 172% (It's Not Nvidia)

Hedge funds are usually known for keeping their investment moves under wraps, providing little to no information for retail investors. However, every quarter, these institutional money managers need to file a form 13F with the Securities and Exchange Commission (SEC), revealing the stocks their funds acquired or sold during the previous quarter, as well as their holdings at the conclusion of it.

Citadel Advisors, managed by billionaire investor Ken Griffin, is a highly esteemed hedge fund on Wall Street. Upon examining the 13F filed by Citadel on Nov. 14, I noticed an intriguing trend. During the third quarter, the fund enhanced its stake by 172% in a semiconductor stock that didn't include Nvidia.

Should retail investors imitate Griffin's moves or hold off from entering the market?

Citadel makes a strong statement

During the third quarter, Citadel substantially boosted its stake in Intel (INTC 3.83%). The table below presents Citadel's holdings in Intel across the final five quarters.

| Metric | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 || --- | --- | --- | --- | --- | --- || Intel shares owned (in millions) | 3.8 | 3.7 | 5.4 | 6.8 | 18.5 |

Intel shares owned (in millions)

As shown in the table, Citadel has been acquiring Intel's shares during the last three quarters. Perhaps the most notable purchase is the acquisition of 11.7 million shares in the last three months, which tripled its stake.

3.8

Why is Citadel bullish on Intel?

3.7

It is widely recognized that one of President-elect Donald Trump's main campaign themes involved supporting increased investment in American-made products and domestic manufacturing. Despite Trump's reluctance to endorse President Biden's CHIPS Act, which will allocate $280 billion in government support to expand the country's semiconductor manufacturing capacity, I believe that Trump will not significantly alter the CHIPS Act after taking office in January.

5.4

Ultimately, the CHIPS Act serves the purpose of incentivizing semiconductor businesses to expand their manufacturing capabilities in the U.S. With the potential for Intel to benefit more from the CHIPS Act than any other U.S.-based chipmaker, I anticipate that Intel will receive even more business from the federal government over the next four years.

6.8

Should investors purchase Intel stock now?

18.5

Presently, Intel's shares have dropped by over 50% this year. To me, the narrative surrounding Intel seems to be "one step forward, two steps backward." Over the past few years, the company has lost significant market share to its competitors, and its performance in the foundry process has left something to be desired. More recently, Intel was replaced in the Dow Jones Industrial Average by Nvidia.

Given its recent operational setbacks, Intel has implemented various cost-reduction measures (primarily layoffs), and there were even reports suggesting that Intel could be bought out. None of these factors make it an appealing investment opportunity.

Then why would Griffin increase his investment in Intel stock when there are seemingly better choices available?

My suspicion is that Griffin believes that Intel stock has reached its lowest point. With Trump returning to the White House, there is a good chance that he will continue awarding more business to Intel in an attempt to aid its recovery. If that's the case, Intel stock could rebound over the next year.

That being said, Intel is still in a turnaround phase, and it is not a promising buy at the moment. If the stock should pick up speed, it would likely do so based on a narrative of rebound instead of an immediate improvement in its operating results. Consequently, I would not be surprised if Citadel sold a large portion of its Intel stock for a quick profit rather than holding onto it for the long term.

In conclusion, Intel's future remains somewhat uncertain. I would recommend against investing in Intel for now.

The revelation in Citadel's 13F filing shows that the hedge fund significantly increased its investment in Intel, which could be an indication of Griffin's confidence in the semiconductor giant's future, given President-elect Trump's potential support for domestic manufacturing through the CHIPS Act. However, with Intel's shares having dropped significantly this year and the company still in a turnaround phase, retail investors might want to exercise caution before entering the market or considering an investment in Intel.

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