This is not financial advice. Do your own research. Invest what you can afford to lose.

Our Strategy: We operate an insurance business that sells put options to stock investors. We help investors limit their losses if their stock falls below a certain price. In return for our protection, investors pay us a premium/upfront fee. Read Letter 2 and Letter 3 to understand more of the mechanics.

Please note: We use 1 policy to represent our deals because we want everyone to be on the same page. In practice, we might sell or buy multiple policies at a time.

This week we bought another long-term insurance policy on Intel $INTC ( ▲ 4.89% ) at a cheaper price. We took advantage of the opportunity to lower our average cost and increase our potential return. This is the second insurance policy we bought on Intel that provides protection below $35. We bought the first one on March 4, 2026, for $520.66 and it expires March 19, 2027. 

We bought the second one on April 2 for $425.66.

We were able to buy it cheaper because Intel’s stock price jumped 17.2% this week over news that Intel agreed to buy back a 49% stake in one of their factories (Fab 34).

Stock insurance policies become cheaper when either:

A) The stock price moves higher from the price guaranteed in the policy. The higher the stock price goes above the protected price, the less likely insurance will be needed to protect against losses.

B) The policy gets closer to expiration, which leaves less time for the stock to fall below the protected price, making the policy less valuable.

C) The volatility in the stock declines, which reduces the likelihood that the stock price will fall below the protected price, making the policy less valuable. 

The policy protecting investors against losses below $35 was cheaper this week because (A) Intel jumped to $50.38, moving it further away from $35, and (B) less time is left on the policy.

The stock does not need to fall below $35 for the insurance policy to gain value. If the stock falls quickly to the low $40s, the policy’s value will increase as more investors seek protection for their investment.

Intel increased because they agreed to buy back the 49% equity stake in their Ireland chip factory, which they previously sold to the investment firm Apollo. When they sold the stake in 2024, it was valued at $11.2 billion. Now, the stake is worth $14.2 billion. They will borrow $6.5 billion and use ~$7.7 billion in cash to repurchase the equity stake.

The market is excited because Intel’s CPU chips are in high demand, and the company recently raised their CPU prices. By buying out Apollo, Intel can now keep all the profits from the factory.

Intel’s CFO, David Zinsner, described the deal:

Something doesn’t sound right to us though.

We suspect this deal had more to do with Apollo wanting cash to bolster their balance sheet as investors withdraw money from Apollo’s private credit funds.

Private credit funds lend money to smaller, private companies. Around 20% of the companies that private credit funds lend to are software companies. Investors fear AI will harm software companies’ business.

Due to a wave of investors demanding their money, the sponsors of private credit funds, like Apollo, have capped the amount their investors can redeem. Sponsors are borrowing money and selling assets to generate the cash needed to pay investors. 

Apollo selling their 49% stake in the factory to raise cash is pure speculation, but it makes more sense to us than Intel wanted the stake back because they saw higher prices and demand for their CPU chips, and they wanted to keep more of the profits.

We believe the 17.2% jump in Intel’s stock price over the Apollo news is unwarranted. When we add this view to the market volatility caused by the war in Iran, higher oil prices, helium shortages, and investor fatigue over AI, we think Intel will fall back to the low $40’s. If it does, the insurance we bought will gain value.

We will sell the higher priced policy ($520.66) when Intel falls. 

We want to recoup some of our losses from Super Micro Computer $SMCI ( ▲ 3.15% ) and the first Intel policy we sold. If you remember, we lost money on the policy we sold on Super Micro when their co-founder and associate got arrested for smuggling. We also lost money on Intel when we canceled the policy we sold to avoid any volatility caused by NVIDIA’s $NVDA ( ▲ 0.93% ) earnings call.

Based on our financial statement (measured on a 1 policy basis), we are down $156.88. 

Buying the policy cheaper on April 2 reduces our cost basis and increases our potential return. We plan to cancel the lower cost policy ($425.66) if Intel falls to $23 within the next 351 days. If it falls to $23, our return will be over 2.8x our investment vs. the 2.3x if we had kept the original position. The return will be higher if we sell the higher priced policy ($520.66) for a gain. 

We are also selling the original, higher priced policy because we don’t want to fill our portfolio with long-term insurance bought to hedge our business. We want most of our capital tied to policies generating immediate income, instead of money tied up in hedges.

Quick note. We are very optimistic about Intel’s business in the long term, and we plan to buy shares if the price falls to $23.

In the short term, we believe the stock market and semiconductor space will face major headwinds.

We are watching how Intel reacts to:

We are also examining other companies in the semiconductor and AI space. We will report on these opportunities soon.

Let’s continue building our own little insurance company. The goal is to make more than we pay out.

Stay strong, stay blessed, and God willing, we’ll see each other next week.

If you have any questions, email me at [email protected]

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