Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Apple Inc. (NASDAQ:AAPL) in this article.
Is Apple Inc. (NASDAQ:AAPL) a marvelous investment now? Prominent investors were in a pessimistic mood. The number of bullish hedge fund positions were cut by 19 recently. Apple Inc. (NASDAQ:AAPL) was in 127 hedge funds’ portfolios at the end of March. The all time high for this statistic is 152. Our calculations also showed that AAPL ranked 12th among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Ken Fisher of Fisher Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to check out the new hedge fund action encompassing Apple Inc. (NASDAQ:AAPL).
Do Hedge Funds Think AAPL Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 127 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the previous quarter. On the other hand, there were a total of 123 hedge funds with a bullish position in AAPL a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
The largest stake in Apple Inc. (NASDAQ:AAPL) was held by Berkshire Hathaway, which reported holding $108363.6 million worth of stock at the end of December. It was followed by Fisher Asset Management with a $7672.7 million position. Other investors bullish on the company included Citadel Investment Group, Adage Capital Management, and Millennium Management. In terms of the portfolio weights assigned to each position Berkshire Hathaway allocated the biggest weight to Apple Inc. (NASDAQ:AAPL), around 40.07% of its 13F portfolio. Value Star Asset Management is also relatively very bullish on the stock, designating 19.02 percent of its 13F equity portfolio to AAPL.
Because Apple Inc. (NASDAQ:AAPL) has experienced declining sentiment from the aggregate hedge fund industry, logic holds that there is a sect of money managers that elected to cut their full holdings by the end of the first quarter. Intriguingly, Jeffrey Talpins’s Element Capital Management dumped the largest investment of the “upper crust” of funds tracked by Insider Monkey, totaling close to $211.4 million in stock, and Michael Larson’s Bill & Melinda Gates Foundation Trust was right behind this move, as the fund sold off about $133 million worth. These moves are important to note, as aggregate hedge fund interest fell by 19 funds by the end of the first quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Apple Inc. (NASDAQ:AAPL) but similarly valued. We will take a look at Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc (NASDAQ:GOOGL), Facebook Inc (NASDAQ:FB), Tesla Inc. (NASDAQ:TSLA), Alibaba Group Holding Limited (NYSE:BABA), and Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM). This group of stocks’ market values match AAPL’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MSFT | 251 | 58964938 | -7 |
| AMZN | 243 | 50421816 | -30 |
| GOOGL | 185 | 24573668 | 6 |
| FB | 257 | 40967433 | 15 |
| TSLA | 62 | 10013166 | -6 |
| BABA | 135 | 15497689 | -21 |
| TSM | 76 | 10870661 | 4 |
| Average | 172.7 | 30187053 | -5.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 172.7 hedge funds with bullish positions and the average amount invested in these stocks was $30187 million. That figure was $130910 million in AAPL’s case. Facebook Inc (NASDAQ:FB) is the most popular stock in this table. On the other hand Tesla Inc. (NASDAQ:TSLA) is the least popular one with only 62 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 60.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 25.8% in 2021 through August 6th and beat the market by 6.7 percentage points. A small number of hedge funds were also right about betting on AAPL, though not to the same extent, as the stock returned 20% since the end of Q1 (through August 6th) and outperformed the market.
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Disclosure: None. This article was originally published at Insider Monkey.
