Tony, RE:<<That is, why do they bother shorting Intel, or whatever, if it makes no difference what the stock does? >>
It has an influence on the portfolio, sure, just the rest of the stocks in a portfolio. But Intel by itself is not going to make or break a quarter for a hedge fund, and certainly won't blow one up--at least a fund large enough to make a difference to Merrill.
<<Whatever is going on, Kurlak's position on Intel the last couple of quarters doesn't make any sense at all.>>
Why not? First of all, Kurlak has been negative on Intel for over a year, not just a couple of quarters. When he first lowered his rating last summer, the average estimate for '98 was around $5.00. The actual number will be closer to $3.25. That's a pretty significant decline, certainly one that warrants caution. Intel just had a home run quarter, sure, but it followed a quarter that was a strike out. As long as your time horizon is longer than 1 quarter, this doesn't necessarily need to change your opinion of the stock. In addition, this home run still showed flat net income, a sharp difference from the home run quarters of a couple of years ago. Disagreeing with Kurlak's opinion is fine, but at least recognize that Kurlak, along with a great number of other analysts on Wall St who follow Intel, has logic to his negative position. For example, an analyst who shows much greater understanding of the industry than Kurlak (but much less stock-picking ability) is Drew Peck of Cowen, who is also negative on Intel. To not appreciate the industry challenges that Intel is facing is irresponsible for a well researched bull in Intel. |
