As we head into the final day for investment managers boasting equity portfolios of at least $100 million to disclose their holdings with the SEC for the latest reporting period of March 31, one thing has already become apparent from the filings that have already poured in: Apple Inc. (NASDAQ:AAPL) is still the most popular stock among hedge funds. In fact its popularity only seems to be increasing. The Insider Monkey data team has tirelessly processed the latest filings to come up with the early results, based on approximately 30% of firms having filed thus far. While we’re not yet declaring the race won, it appears that Apple would have to go seriously off stride at the quarter pole to cough up its lead at this point.
That Apple Inc. (NASDAQ:AAPL) continues to be the darling of hedge funds is not a big surprise, even as investors like billionaire David Tepper fled the security heading into 2015. Thus far, 63 firms have reported an ownership stake in Apple, 26% greater than the mere 50 that are invested in Actavis plc (NYSE:ACT), which sits in second spot. That is a tremendous increase from the 9% lead Apple held over second place finisher Citigroup Inc (NYSE:C) when it ranked as the most popular stock among hedge funds at the end of the previous filing period.
Apple, which owns one of the most profitable businesses ever, has not disappointed investors in 2015 despite unrivaled expectations. The Tim Cook-led company has delivered record earnings in back-to-back quarters and quieted some of its more vocal investors like Carl Icahn by announcing that $200 billion would be returned to shareholders through increased dividend payments and an enhanced share buyback program that will run through the end of March, 2017.
However, while Apple Inc. (NASDAQ:AAPL)’s shares have gained 17% year-to-date, they have been sluggish since its most recent earnings report on April 27, despite the record results and expanded capital return program. In fact shares have slid by about 3% since then. It appears that investors may now be worried about slowing growth for the most valuable company in the world, including uncertainty over the success of the Apple Watch, which will be integral to that next phase of growth. The fact that the margins on the Apple Watch will fall beneath Apple’s average margins also came as an unexpected disappointment to investors.
That will perhaps make the next filing period the more telling one as far as gauging the sentiment towards Apple goes, as we’ll see whether funds feel the easy money has now been made or whether they feel Apple is a holding for the long-term. Adage Capital Partners is one of the funds in our database which has filed for the current period and disclosed ownership of Apple.
Let’s quickly run through the remainder of the early top five results now. As mentioned, Actavis plc (NYSE:ACT) has moved into second from third, with 50 funds thus far reporting ownership in the pharmaceutical giant, which completed its acquisition of Allergan during the first quarter. Funds that have reported thus far have $2.48 billion invested in Actavis plc (NYSE:ACT). First Eagle Investment Management and Adage Capital Partners are among the funds that reported ownership of Actavis during the current filing period.
Microsoft Corporation (NASDAQ:MSFT) has so far made the biggest move, jumping into a tie for third from ranking in eighth place after the conclusion of the previous filing period. It appears investors may have jumped on the opportunity to enter Microsoft Corporation (NASDAQ:MSFT) at a reduced rate following its late January swoon that dropped it to a six-month low. Microsoft Corporation (NASDAQ:MSFT) has quickly rebounded by more than 25% from that low point. Stevens Capital and First Eagle Investment Management are among the funds that have reported ownership of Microsoft, which appears to wisely be steering clear of a rumored purchase of Salesforce.com, Inc (NYSE:CRM).
Citigroup Inc (NYSE:C) and Google Inc (NASDAQ:GOOG) are also tied for third, with all three companies having 47 funds disclosing ownership in them thus far. In terms of invested capital, Microsoft leads at $4.92 billion, followed by Citigroup Inc (NYSE:C) at $3.62 billion and then Google Inc (NASDAQ:GOOG) at $2.18 billion. Citigroup has fallen from standing alone in second by a considerable margin after the previous filing period, while Google Inc (NASDAQ:GOOG), which has had rumored purchases of its own swirling around it involving both Tesla Motors Inc (NASDAQ:TSLA) and Twitter Inc (NYSE:TWTR), has moved up from previously ranking in fifth.
Check back with Insider Monkey over the coming days and weeks as we process the remainder of the filings (70% of which will be made today), and produce a series of informative articles on the results. Even though most investors believe that tracking 13F filings is a fruitless endeavor because they are filed with a delay of a maximum of 45 days after the end of a calendar quarter, the results of our research prove that is not the case. To be on the safe side, we used a delay of 60 days in our backtests that involved the 13F filings of funds between 1999 and 2012 and we still managed to gain an annual alpha in the double digits. Moreover, since the official launch of our small-cap strategy in August 2012, it has generated returns of more than 139%, beating the S&P 500 Total Return Index by more than 80 percentage points (see the details).
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