Hedge Funds Are Riding The Apple Inc. (AAPL) Wave

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Apple Inc. (NASDAQ:AAPL) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.

Apple Inc. (NASDAQ:AAPL) was in 128 hedge funds’ portfolios at the end of June. The all time high for this statistics is 152. AAPL has seen an increase in support from the world’s most elite money managers lately. There were 123 hedge funds in our database with AAPL holdings at the end of March. Our calculations also showed that AAPL ranked #11 among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 56 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

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How have hedgies been trading Apple Inc. (NASDAQ:AAPL)?

Heading into the third quarter of 2020, a total of 128 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards AAPL over the last 20 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Berkshire Hathaway, managed by Warren Buffett, holds the number one position in Apple Inc. (NASDAQ:AAPL). Berkshire Hathaway has a $89.4328 billion position in the stock, comprising 44.2% of its 13F portfolio. The second largest stake is held by Fisher Asset Management, led by Ken Fisher, holding a $5.221 billion position; the fund has 5.1% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism encompass Ken Griffin’s Citadel Investment Group, Cliff Asness’s AQR Capital Management and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Berkshire Hathaway allocated the biggest weight to Apple Inc. (NASDAQ:AAPL), around 44.18% of its 13F portfolio. White Square Capital is also relatively very bullish on the stock, designating 26.07 percent of its 13F equity portfolio to AAPL.

Consequently, specific money managers were breaking ground themselves. Tairen Capital, managed by Larry Chen and Terry Zhang, assembled the largest position in Apple Inc. (NASDAQ:AAPL). Tairen Capital had $115.1 million invested in the company at the end of the quarter. John Hurley’s Cavalry Asset Management also initiated a $33.9 million position during the quarter. The following funds were also among the new AAPL investors: Bijan Modanlou, Joseph Bou-Saba, and Jayaveera Kodali’s Alta Park Capital, Florian Kronawitter’s White Square Capital, and Karim Abbadi and Edward McBride’s Centiva Capital.

Let’s now review hedge fund activity in other stocks similar to Apple Inc. (NASDAQ:AAPL). We will take a look at Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc (NASDAQ:GOOGL), Alphabet Inc (NASDAQ:GOOG), Alibaba Group Holding Limited (NYSE:BABA), Facebook Inc (NASDAQ:FB), Berkshire Hathaway Inc. (NYSE:BRK-B), and Visa Inc (NYSE:V). All of these stocks’ market caps resemble AAPL’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 167.7 hedge funds with bullish positions and the average amount invested in these stocks was $21.97 billion. That figure was $106 billion in AAPL’s case. Amazon.com, Inc. (NASDAQ:AMZN) is the most popular stock in this table. On the other hand Berkshire Hathaway Inc. (NYSE:BRK-B) is the least popular one with only 107 bullish hedge fund positions. Apple Inc. (NASDAQ:AAPL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AAPL is 52.7. Stocks with higher number of hedge fund positions relative to comparable stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 28.2% in 2020 through August 24th and still beat the market by 20.6 percentage points. Hedge funds were also right about betting on AAPL as the stock returned 38.3% since the end of June and outperformed the market by an even larger margin.

Disclosure: None. This article was originally published at Insider Monkey.