Were Hedge Funds Right About Apple Inc. (AAPL)?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Apple Inc. (NASDAQ:AAPL) based on that data and determine whether they were really smart about the stock.

Is Apple Inc. (NASDAQ:AAPL) a bargain? Money managers were getting less bullish. The number of bullish hedge fund positions fell by 18 recently. Apple Inc. (NASDAQ:AAPL) was in 120 hedge funds’ portfolios at the end of September. The all time high for this statistic is 152. Our calculations also showed that AAPL ranked #10 among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 138 hedge funds in our database with AAPL holdings at the end of June.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind we’re going to take a peek at the key hedge fund action regarding Apple Inc. (NASDAQ:AAPL).

Cliff Asness of AQR Capital Management

Do Hedge Funds Think AAPL Is A Good Stock To Buy Now?

At the end of September, a total of 120 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from the second quarter of 2021. Below, you can check out the change in hedge fund sentiment towards AAPL over the last 25 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Apple Inc. (NASDAQ:AAPL) was held by Berkshire Hathaway, which reported holding $125529.7 million worth of stock at the end of September. It was followed by Fisher Asset Management with a $8615.3 million position. Other investors bullish on the company included Citadel Investment Group, Adage Capital Management, and AQR Capital Management. In terms of the portfolio weights assigned to each position Berkshire Hathaway allocated the biggest weight to Apple Inc. (NASDAQ:AAPL), around 42.78% of its 13F portfolio. Harvard Management Co is also relatively very bullish on the stock, designating 15.62 percent of its 13F equity portfolio to AAPL.

Seeing as Apple Inc. (NASDAQ:AAPL) has experienced a decline in interest from the smart money, it’s safe to say that there exists a select few funds that slashed their entire stakes last quarter. At the top of the heap, Sander Gerber’s Hudson Bay Capital Management dumped the biggest position of the 750 funds tracked by Insider Monkey, worth about $267.1 million in call options. Brad Dunkley and Blair Levinsky’s fund, Waratah Capital Advisors, also cut its call options, about $109.6 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 18 funds last quarter.

Let’s also examine 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), Alphabet Inc (NASDAQ:GOOGL), Amazon.com, Inc. (NASDAQ:AMZN), Meta Platforms, Inc. (NASDAQ:FB), Tesla Inc. (NASDAQ:TSLA), Berkshire Hathaway Inc. (NYSE:BRK-B), and Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM). All of these stocks’ market caps are closest to AAPL’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 166.9 hedge funds with bullish positions and the average amount invested in these stocks was $30739 million. That figure was $146351 million in AAPL’s case. Microsoft Corporation (NASDAQ:MSFT) is the most popular stock in this table. On the other hand Tesla Inc. (NASDAQ:TSLA) is the least popular one with only 60 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 60.5. 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 29.6% in 2021 and still beat the market by 3.6 percentage points. A relatively small number of hedge funds were also right about betting on AAPL as the stock returned 23.7% since the end of the third quarter (through 1/31) and outperformed the market by an even larger margin.

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