We keep a close watch on Apple Inc. (NASDAQ:AAPL) and the smart money sentiment among some 800 hedge funds and other institutional investors that we track as part of our small-cap strategy (see more details here). Insider Monkey co-founder Dr. Inan Dogan is bearish on Apple over the long-run as he said in a CNBC intervention last year. Moreover, in an article in August, Dr. Dogan wrote:
“All in all, I am long term bearish on Apple Inc. (NASDAQ:AAPL) because I believe the smartphone market will effectively be commoditized by the end of the next recession (this may be in two years or it may be in four years, I can’t predict recessions). Apple’s brand/image is the biggest edge it has over its rivals. Not its ecosystem. I switched from iPhone to S6 without any trouble three months ago. I think by the end of the next recession consumers will have enough incentives to try out other phones that carry much smaller profit margins. It seems like they already started doing that in China last quarter, which is why investors started to discount Apple shares in the last couple of weeks.”
When we look at the smart money sentiment, it also suggests that the hype surrounding Apple Inc. (NASDAQ:AAPL) should be ignored. The stock had ranked as one of the most popular in terms of the number of bullish funds for several quarters in a row, but during the last quarter of 2015, it dropped to the seventh spot as the number of invested funds stayed the same, but other stocks gained more traction. However, what’s also important is that the funds from our database own just 3% of the company’s outstanding stock.
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Over the last year, several big names dropped Apple Inc. (NASDAQ:AAPL) from their portfolios over concerns regarding the company’s market share in China and missing iPhone deliveries estimates, including billionaire Stephen Mandel’s Lone Pine Capital, which unloaded 6.84 million shares during the second quarter. One of the company’s biggest fans last year was billionaire Carl Icahn, who projected a $240 price target last year and said on several occasions that Apple is his favorite stock and that he prefers to buy more shares when it loses ground. However, Icahn’s last several 13Fs showed that he didn’t increase his position over the course of 2015 and sold 7.0 million shares during the last quarter. In this way, Icahn owns 45.76 million shares of Apple worth $4.82 billion as of the end of 2015, which account for some 25% of the aggregate amount held by all the investors in our database.
To sum up, it’s important to keep in mind that generating alpha from large-cap stocks, such as Apple, is difficult and only few investors or hedge fund managers can do that over the long-term, which is why it is not a good idea to focus on the hype that surrounds a stock currently and bet on the long-term performance of a stock, based on the current trends.
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