In addition to Janet Yellen's confused ramblings at 3:45 pm on Friday, which did all they could to push the S&P to close green for the year, the other catalyst that sent stocks higher on Friday afternoon was the unconfirmed rumor reported by the WSJ that Intel would purchase Altera, the news of which briefly sent INTC stock higher than the entire market cap of Altera on what can only be described as the latest short squeeze. Yet one entity that appears unhappy with this news is none other than Goldman Sachs which likely was snubbed as an advisor or an underwriter by Intel in recent months, and which all else equal, once again slaughtered the muppets who listened to its recommendation to Sell Intel stock (just days after another comparable slaughter by Goldman on SanDisk longs this time on the Conviction Buy side [6]).
Here is the Goldman bottom line to Kermit:
On Friday afternoon, the Wall Street Journal reported Intel may be considering the acquisition of Altera but provided no additional information. Recall that Altera is a provider of programmable logic chips into the communications infrastructure, networking, and industrial end markets. For context, the median semi deal has been done at a 35% equity premium and 22X NTM EPS (vs. ALTR trading at 22X 2015E as of 3/26 close) and 10X NTM EBITDA (vs. ALTR at 16X 2015E).
Our 12-month price target is $23, based on 10X normalized EPS of $2.30.
The good news that fading Goldman is becoming rapidly the most profitable trade since we discovered the gem that is MacNeil Curry. Expect a posting by an anonymous and overly defensive Vampire Squid defending Goldman's sellside practices in the Brookings Institution blog in the coming weeks.
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