6. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Shareholders In Q1 2024: 150
Tech giant Apple Inc. (NASDAQ:AAPL) is a household name. These days, the rumor mill is adamant when it comes to Apple and AI as sources insist that Apple Inc. (NASDAQ:AAPL) is interested in partnering up with OpenAI to bring AI functionality to its Siri virtual assistant and validate the consumer use cases for the highly hyped technology. Amidst broader concern on Wall Street about the iPhone and Apple’s China woes, Wedbush’s Dan Ives was filled with optimism in a May 2024 interview. During the talk, he shared that 70% of China’s 225 million iPhones were yet to be upgraded, and the introduction of AI to the Pro model could very well see Apple Inc. (NASDAQ:AAPL) grow the iconic Average Selling Price (ASP) in the region.
As Q1 2024 ended, 150 hedge funds part of Insider Monkey’s database had held a stake in Apple Inc. (NASDAQ:AAPL). Warren Buffett’s Berkshire Hathaway held the largest stake which was worth $135 billion.
Due to its heft, it’s hard for a firm like Apple Inc. (NASDAQ:AAPL) to continue to grow in triple digit percentages. However, its heft also allows the firm to generate massive amounts of cash that it then uses to buy back shares. Apple Inc. (NASDAQ:AAPL)’s latest share buybacks are worth $110 billion, which is more valuable than the market value of most companies. Additionally, a forward P/E ratio of 29.33 makes the stock slightly overvalued compared to the S&P 500.
Polen Capital shared some of the stresses that have plagued Apple Inc. (NASDAQ:AAPL)’s shares in 2024, which have stood out from big tech due to a rather modest 3.6% year to date gain. The fund shared in its Q1 2024 investor letter:
The largest relative contributors to the Portfolio’s performance during the first quarter were SAP, Apple Inc. (NASDAQ:AAPL) (not owned), and Amazon.
. . . .The zero weight to Apple was another notable relative contributor in the quarter. More recently, Apple has come under pressure from a confluence of issues ranging from a weak iPhone cycle, market share erosion in China, mounting regulatory pressureb around App Store fees in Europe, and a lawsuit from the U.S. Justice Department accusing the company of anticompetitive practices in its iPhone business. All this has resulted in the stock down -11% year to date, underperforming the overall Index by -19%—Apple’s worst relative performance quarter since 2013. It remains a great business and one we follow, but we’re content not owning it right now, given its growth prospects relative to its valuation.”
Apple shares currently trade at a forward PE ratio of 29 which is much higher than Alphabet’s and Meta’s forward PE ratios.
