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Director Lip-Bu Tan Is Betting Big on Intel (INTC) Stock

Source: JHVEPhoto / Shutterstock.com
Intel (NASDAQ:INTC) stock is in focus following significant purchases from Director Lip-Bu Tan. The executive joined Intel’s board on Sept. 1 and is also the Chairman for both Cadence Design Systems (…

Source: JHVEPhoto / Shutterstock.com

Intel (NASDAQ:INTC) stock is in focus following significant purchases from Director Lip-Bu Tan. The executive joined Intel’s board on Sept. 1 and is also the Chairman for both Cadence Design Systems (NASDAQ:CDNS) and venture capital firm Walden International.

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Tan’s recent purchase of INTC stock comes as somewhat of a surprise, as the director was not required to purchase shares that quickly. Intel states that non-employee directors are urged to purchase and hold INTC stock at a “minimum of five times the annual cash retainer.” These directors have five years to complete this process, however.

Last year, the annual cash retainer was $90,000, meaning that Tan was expected to purchase $450,000 of INTC stock within five years. He did that and more.

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INTC Stock: Director Lip-Bu Tan Buys 100,000 Shares

On Nov. 4, Tan purchased 1,854 shares at an average price of $27.49 per share after previously owning just 500 shares. Four days later, Tan purchased another 48,416 shares at an average price of $27.97. Then, on Nov. 16, the director made his largest purchase yet. He scooped up 50,000 shares at an average price of $29.48, bringing his total ownership to 100,500 shares. That’s worth about $2.9 million at current prices. Of those shares, 100,000 are held by his trust while the remaining 500 are held directly. It’s also worth noting that none of these purchases were made via a prearranged 10b5-1 trading plan.

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Tan isn’t the only Intel executive who feels bullish, however. On Oct. 31, CEO Pat Gelsinger purchased 8,830 shares at an average price of $28.15. On the same day, he also converted 6,779 shares of restricted stock units into 6,779 shares of common stock and sold 3,362 shares at a price of $28.62. Following the purchase and conversion, Gelsinger now owns 266,530 shares through his trust and 96,049 shares directly. Gelsinger’s trades were also not enacted via a 10b5-1 plan.

Intel Set to Benefit From the CHIPS Act

So, why exactly are these top insiders buying? In August, President Joe Biden signed into law the Creating Helpful Incentives to Produce Semiconductors in America (CHIPS) Act. CHIPS is meant to increase domestic technology production and will provide $39 billion for semiconductor companies specifically. Intel isn’t expected to receive capital from the CHIPS Act until next year, but that’s right around the corner.

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Intel CEO Gelsinger is a huge supporter of the act. He had the following to say:

“I hope everybody on the line just realizes how significant the passage of this was for semiconductors, for technology, for long-term research. This was huge.”

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The CHIPS Act will likely help fund Intel’s ongoing mission to build two facilities in New Albany. With the help of CHIPS, the New Albany location could become one of the largest chip facilities in the world.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

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Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.

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