With all three indexes well in the green today, three big tech companies, Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc (NASDAQ:GOOGL), and one dominant logistics provider, United Parcel Service, Inc. (NYSE:UPS), are trending. Let’s find out why each company is in the spotlight.
Moreover, we will also examine relevant hedge fund sentiment toward the equities. Most investors don’t understand hedge funds and indicators that are based on hedge funds’ activities. They ignore hedge funds because of their recent poor performance in the bull market. Our research indicates that hedge funds underperformed because they aren’t 100% long. Hedge fund fees are also very large compared to the returns generated and they reduce the net returns experienced by investors. We uncovered that hedge funds’ long positions actually outperformed the market. For instance the 15 most popular small-cap stocks among funds beat the S&P 500 Index by 52 percentage points since the end of August 2012. These stocks returned a cumulative of 102% vs. a 48.6% gain for the S&P 500 Index (see the details here). That’s why we believe investors should pay attention to what hedge funds are buying (rather than what their net returns are).
According to an 8-K filing with the Securities and Exchange Commission, the board of directors of Apple Inc. (NASDAQ:AAPL) recently amended the company’s bylaws to allow shareholders, or a group of up to twenty shareholders, who have owned at least 3% of Apple’s outstanding common stock continuously for three years, to nominate directors constituting up to twenty percent of the Board. Investors have welcomed the news, as the company’s bylaw revision makes Apple Inc. (NASDAQ:AAPL) more democratic and ensures management is more accountable to its shareholders.
It’s not like Apple’s current management isn’t doing what’s best for shareholders. In the face of bearish iPhone sentiment, Apple management has tried to right the ship. Apple’s CEO Tim Cook recently did an interview with 60 Minutes in which he argued that Congress should fix the tax code so that corporations with cash overseas can repatriate their cash without paying the current 40% tax. With almost $200 billion on its balance sheet, Apple has more overseas cash than anyone else, and the tech giant would benefit enormously if Congress lowered the repatriation tax to 10% or 15%. With that cash, Apple could buy back around 25% of its outstanding stock and increase its EPS by 33% at current market prices. Given Apple’s cheap forward P/E of 10 and its dividend yield of 1.94%, 133 elite hedge funds own the stock, including Carl Icahn’s Icahn Capital LP and David Einhorn’s Greenlight Capital.
The alliance between Amazon.com, Inc. (NASDAQ:AMZN) and United Parcel Service, Inc. (NYSE:UPS) could be under some pressure, as the Wall Street Journal reports that Amazon.com, Inc. (NASDAQ:AMZN) is unhappy with its delivery bill. According to SEC filings, Amazon’s shipping costs have increased to 11.7% of revenue in the third quarter, up from 10.4% of sales last year, marking the beginning of an unsettling trend. United Parcel Service, Inc. (NYSE:UPS) has accounted for a big part of those expenses, with sources telling the Journal that Amazon’s account with United Parcel Service, Inc. (NYSE:UPS) exceeds $1 billion a year. Given Amazon’s relentless quest for efficiency, some analysts fear that Amazon could take matters into its own hands and build its own logistics service and compete against United Parcel Service. With its built-in customer base, and deep resources, Amazon is perhaps the most eligible company to challenge existing logistics providers. A total of 113 funds from our database are long Amazon and 40 funds own shares of United Parcel Service as of September 30.
