Why Apple (AAPL), Boeing (BA) and Other Blue Chips Are Dragging the Markets Lower

The U.S stock market is feeling the pain again today, with the latest wave of earnings reports providing some disappointing results. Investors are also impatiently awaiting the results of the Federal Reserve’s meeting. Although another hike is believed to be unlikely, market participants will look for a reaction from the FOMC to the latest developments in the global markets. Until then, let’s have a look at Apple Inc. (NASDAQ:AAPL), Boeing Co (NYSE:BA), United States Steel Corporation (NYSE:X), Santander Consumer USA Holdings Inc (NYSE:SC), and Tupperware Brands Corporation (NYSE:TUP), which are some of today’s biggest losers, and see how investors have been trading them.

We determine hedge fund sentiment by analyzing the equity portfolios of some of the best-performing hedge funds and institutional investors. Through extensive research, we have determined that the due diligence that these investors employ, as well as their long-term focus makes them perfect targets to emulate. However, the results of our analysis have also showed that the small-cap picks of these funds can generate much better returns, with the 15 most popular small-cap stocks beating the market by an average of 95 basis points per month (read more details here).

Apple Inc. (NASDAQ:AAPL)‘s stock is under pressure today, falling by 3.84% as investors have found the company’s latest quarterly earnings report to be disappointing. The Cupertino-based tech giant reported a 1.7% increase in revenue to $75.87 billion and a profit of $3.28 per share. Although Apple managed to beat analysts’ consensus earnings estimate of $3.23 per share, revenue fell short of expectations. This is not why the stock is tanking, however. Apple said it sold 74.8 million iPhones during the holiday quarter, while market participants were expecting 75.46 million units to be sold. Sales of iPads and Macs also lagged behind expectations, while the increase in earnings per share was greatly helped by Apple’s share buyback program.

For some time now, Apple Inc. (NASDAQ:AAPL) has been the second-most popular stock among the funds we follow, with 18% of them having reported a stake in the tech giant as of the end of the third quarter. A long-standing fan of Apple, David Einhorn boosted his stake during the third quarter by 53%, taking it to 11.2 million shares.

Although Boeing Co (NYSE:BA) managed to surpass Wall Street’s expectations in its latest quarterly report, the company’s 2016 outlook has put downward pressure on the stock. For the quarter ended December 31, Boeing announced adjusted earnings of $1.60 per share on the back of $23.5 billion in revenue. Analysts were looking for a profit of $1.28 per share and revenue of $23.53 billion. For the current year, the company expects to deliver between 740 and 745 jets, compared to the 762 planes it sold in 2015. Boeing’s 2016 estimates of $93 billion-to-$95 billion in revenue and earnings of $8.15-to-$8.35 per share came well below analysts’ projections of $97.26 billion in revenue and a profit of $9.41 per share. The stock has opened lower today and has continued to fall, currently down by more than 9% from yesterday’s close.

At the end of September, 35 of the funds we track held a long position in Boeing Co (NYSE:BA), down from 44 a quarter earlier. Ken Griffin is upbeat about the prospects of this stock however, having increased his holding by 65% over the quarter. According to its latest 13F filing, Citadel Investment Group holds a little over 1.16 million Boeing shares.

United States Steel Corporation (NYSE:X) is down after a disappointing fourth quarter. The company posted a $999 million loss, having reported a profit a year before, after revenue slumped by 37% because of lower commodities prices. On a per share basis, the loss stands at $6.83, whereas analysts were expecting a loss of $0.88 per share, while revenue came in at $2.57 billion, beating estimates of $2.49 billion. The company said that it only expects to break-even in 2016, as the crumbling demand for steel and the strong dollar continue to hurt its performance. The stock has dropped by more than 13% this morning.

The popularity of United States Steel Corporation (NYSE:X) also plummeted during the third quarter, as the number of long positions held by funds in our system decreased to 25 by the end of the quarter, from  29 at the start of it. Ken Griffin was among those dumping the stock, having cut his position by 87%, leaving Citadel with just 1.27 million shares.

Shares of Santander Consumer USA Holdings Inc (NYSE:SC) are down by 15% in mid-morning trading, after the company missed fourth quarter profit forecasts. The company said it registered revenue of $1.75 billion, surpassing expectations of $1.71 billion, and earnings of $0.19 per share, miles away from Wall Street’s expectations of $0.57 a share. Full year figures came in at $6.74 billion in revenue and a profit of $2.41 per share. By yesterday’s closing bell, the stock had already fallen by 15% since the start of the year.

At the end of September, roughly 15% of Santander Consumer USA Holdings Inc (NYSE:SC)’s common stock was held by 35 top funds, unchanged during the quarter. Whereas Lee Ainslie sees great upside in this stock, having boosted his stake by 10%, Fir Tree chose to reduce its exposure, having dumped nearly half of its position during the quarter. Ainslie’s Maverick Capital held 11.5 million shares, while Fir Tree reported ownership of 4.11 million shares.

Tupperware Brands Corporation (NYSE:TUP)‘s fourth quarter results were disappointing as well, sending the stock down by roughly 15% during the first hours of trading. Sales have been severely affected by the strong dollar, as the company gets approximately 70% of sales from overseas. In Asia, sales fell by 13% in dollar terms and compared to only 3% in local currency. A similar situation occurred in South America, where sales grew by 22% in local currency terms, but fell by 17% when converted to dollars. For the fourth quarter, Tupperware reported earnings of $1.35 per share, below analysts’ estimates of $1.38 per share. Revenue came in at $592.1 million, missing forecasts of $608 million. The company has also issued updated forecasts for 2016 of earnings of $0.74-to-$0.79 per share, below analysts’ estimates of $1.02 a share. Sales are nevertheless expected to increase by 10%-to-12%, whereas investors were only looking for a 4% increase.

Tupperware Brands Corporation (NYSE:TUP) is the only company from this list that gained in popularity during the third quarter. The number of funds long the stock increased to 18 by the end of September, from 16 at the end of June. Among the funds we follow, the largest stake in Tupperware Brands is held by Huber Capital Management, run by Joe Huber. In its latest 13F filing, the fund reported ownership of 1.52 million shares, up by 10% over the quarter.

Disclosure: None