In this article, we discuss the top 5 stock picks in The Motley Fool’s 1623 Capital latest portfolio. If you want to see more top stocks in the 1623 Capital’s portfolio, check out The Motley Fool’s 1623 Capital Latest Portfolio: Top 10 Stock Picks.
5. Apple Inc. (NASDAQ:AAPL)
1623 Capital’s Stake Value: $8.34 million
Percentage of 1623 Capital’s 13F portfolio: 5.2%
Number of Hedge Fund Holders: 128
The largest computer hardware company in the world in terms of market capitalization, Apple Inc.(NASDAQ:AAPL) is a hardware and software company known for producing a variety of popular gadgets and accessories. Shares of the tech giant fell over 8% on October 1 after Bloomberg reported that Apple Inc. (NASDAQ:AAPL) is pulling back from a production increase for the iPhone 14 models given that the anticipated demand might not be as strong as previously expected. 1623 Capital owned 61,032 Apple Inc. (NASDAQ:AAPL) shares during the second quarter of this year for a $8.34 million stake that represented 5.2% of its portfolio.
On September 30, Evercore ISI analyst Amit Daryanani maintained an Outperform rating and $190 price target on Apple Inc. (NASDAQ:AAPL) shares, stating that the strong demand signal for Apple’s iPhone 14 Pro and Pro Max stands “in stark contrast” to recent concerns around a demand slowdown. Although the analyst states that iPhone units will be stable to slightly up, he adds that “the real story” is that average selling prices will be up a high single digits percentage in the second half.
At the close of Q2 2022, 128 hedge funds held stakes in Apple Inc. (NASDAQ:AAPL). The total value of these stakes amounted to $143 billion. As of June 30, Berkshire Hathaway is the top shareholder in Apple Inc. (NASDAQ:AAPL) and has stakes worth $122 billion in the company.
Here is what Distillate Capital Partners LLC had to say about Apple Inc. (NASDAQ:AAPL) in its second-quarter 2022 investor letter:
“Apple was largest new purchase in the quarter, at a 2% weight. Apple underperformed the overall market last quarter, and given very minimal debt, this price weakness translated into a commensurate fall in its enterprise value. For stocks with higher debt levels, it takes a disproportionately bigger market cap drop to achieve the same valuation improvement and this is a key reason we avoid highly leveraged names where significant price weakness can be experienced during a revaluation process. Alongside this decline in EV for Apple, its estimated free cash flows have risen steadily throughout the year. This contrast between a falling enterprise value and rising free cash flow, which is highlighted in Figure 12, made the stock sufficiently better valued such that it entered the portfolio. While Apple’s valuation is now attractive enough to warrant inclusion in the portfolio, it still ranks in the bottom quartile of the portfolio’s holdings and so the stock’s initiating weight is capped at a 2%. This contrasts significantly with Apple’s near-7% position in the S&P 500 benchmark, and reflects both our preference to avoid too much concentration risk as well our goal of ensuring that the overall portfolio valuation is as attractive as possible while balancing characteristics of stability and low indebtedness.”
