On Monday, Mizuho (NYSE: MFG ) TMT Sector Specialist Jordan Klein provided insights into the recent speculation about Taiwan Semiconductor Manufacturing Company (TSM) potentially acquiring a controlling interest in Intel Corporation (NASDAQ: INTC )'s U.S. factories. Klein suggests that the current rise in Intel's stock price is not driven by institutional investors, but rather by retail and quantitative funds, which could lead to a swift sell-off.
Klein pointed out that the market movement for Intel is not supported by institutional money, as he has not encountered any fund managers who are in favor of the deal or currently hold long positions. According to Klein, multi-manager hedge fund investors find the idea of TSM acquiring control without managing the intellectual property implausible. Additionally, there is widespread disbelief that President Trump would permit a foreign entity to take control of Intel's fabrication plants.
The analyst also dismissed the possibility of Broadcom (NASDAQ: AVGO ) Inc. purchasing Intel's product line without a TSM-Intel Foundry Services (IFS) combination. This skepticism extends to long-only managers, who are wary of betting on Intel's rally, doubting the company's ability to turn around.
Despite the lack of institutional support, Klein acknowledged that if the rumors were to materialize into a deal, Intel's stock could climb significantly higher due to the absence of "real money" currently invested at these levels. However, he anticipates some consolidation in the stock's price and recognizes the challenge analysts face in recommending Intel as a long investment to portfolio managers.
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