5 Long-Term Stock Picks of Skylands Capital

2. Apple Inc. (NASDAQ:AAPL)

Value of Skylands Capital‘s 13F Position: $45.8 million

Number of Hedge Fund Shareholders: 132

Skylands Capital has been on the Apple Inc. (NASDAQ:AAPL) bandwagon since the second quarter of 2011 and the position has undoubtedly been one of its best investments, gaining 1,225% since the middle of 2011. Skylands trimmed its Apple stake by 3% to 334,760 shares during Q2.

Apple Inc. (NASDAQ:AAPL)’s fiscal Q3 data showed that the company is successfully converting more and more users over to its smartphones from other devices, achieving double-digit year-over-year growth on that front during the quarter. Those are important customers for Apple to wrangle, not only because they weaken the competition, but because they build up Apple’s installed base of users compared to a previous Apple user simply upgrading to a newer model phone. When coupled with the fact that user engagement across its services is also rising, bringing new users into the Apple ecosystem is even more rewarding.

Wedgewood Partners is bullish on Apple Inc. (NASDAQ:AAPL)’s ability to maintain its competitive advantage in the lucrative high-end tier of the smartphone market, having this to say about the company in its Q2 2022 investor letter:

“Apple grew revenues +9%, driven by +17% growth in the Services segment. While iPhone revenues grew a modest +5%, it was on an exceptional year ago comparison of +66%. iPhone continues to capture most industry smartphone profits by focusing on high-end price tiers. Apple is taking nearly two-thirds of the revenue share in the premium ($400 and above) smartphone segment. Further, most of the growth was driven by expansion in the “ultra-premium” price tier of $1000 or more per unit.^[1] As we have highlighted in the past, Apple’s relentless focus on the development and integration between hardware (especially integrated circuits) and software continues to add significant value for customers of its products and services. We expect this favorable competitive dynamic to continue for the foreseeable future.