Why Apple, IBM, AMD, Goldman Sachs & Metlife Are All Tumbling Today

After an almost-flat Tuesday, the markets are back to tumbling today. The three major U.S stock indexes (the Dow Jones, S&P 500, and NASDAQ) were all down by about 3% by midday, with stocks like Goldman Sachs Group Inc (NYSE:GS), International Business Machines Corp. (NYSE:IBM), Apple Inc. (NASDAQ:AAPL), Advanced Micro Devices, Inc. (NASDAQ:AMD), and Metlife Inc (NYSE:MET) leading the declines. We’ll take a look into the events driving the large drops in these stocks, as well as at how the funds in our database feel about said companies.

While there are many metrics that investors can assess in the investment process, hedge fund sentiment is something that is often overlooked. However, hedge funds and other institutional investors allocate significant resources while making their bets and their long-term focus makes them the perfect investors to emulate. This is supported by our research, which determined that following the small-cap stocks that hedge funds are collectively bullish on can help a smaller investor beat the S&P 500 by around 95 basis points per month (see more details here).

Back to the stocks that interest us, there’s Goldman Sachs Group Inc (NYSE:GS), which is trading down by almost 3% this afternoon, after the company announced its fourth quarter financial results before the morning bell. The financial and bank holding company reported earnings of $4.68 per share on revenue of $7.27 billion, well above expectations. However, these figures exclude a legal settlement with the U.S government, which cost the company $5 billion, or $3.41 per share. Taking this into account, actual earnings fell to $1.27 per share, the lowest in four years.

As many investors know, Warren Buffett’s Berkshire Hathaway is one of the largest institutional investors of Goldman Sachs Group Inc (NYSE:GS). Buffett’s holding company disclosed ownership of more than 10.95 million shares of the company as of the end of the third quarter. However, over the period, the firm trimmed its holding by 14%. Other funds are also turning away from Goldman Sachs Group Inc (NYSE:GS); over the third quarter, the number of funds in our database long the stock fell to 63 from 67.

On the following pages, we will take a look into the reasons behind the declines in International Business Machines Corp. (NYSE:IBM), Apple Inc. (NASDAQ:AAPL), Advanced Micro Devices, Inc. (NASDAQ:AMD) and Metlife Inc (NYSE:MET).

Next up is International Business Machines Corp. (NYSE:IBM), down by over 5.5%. After the market closed on Tuesday, the Big Blue reported earnings of $4.84 per share, above the Street’s consensus of $4.76 per share. On the other hand, revenue of $22.06 billion fell slightly short of expectations for $22.23 billion. Management said the disappointing sales were driven by a strong U.S dollar and weak IT spending.

In this case, Berkshire Hathaway is not one of the largest institutional investors, it is the largest, with more than 81.0 million shares as of September 30. But it is not only Mr. Buffett that’s bullish on International Business Machines Corp. (NYSE:IBM); over the third quarter, the number of funds in our database with long positions in the company rose by 6.7%, to 63.

Shares of Apple Inc. (NASDAQ:AAPL) are also trading down, by about 2.4%, today. The drop was probably driven by the publication of a UBS survey, which showed slowing sales of newer model iPhones in the fourth quarter, as older models of the iPhone gained popularity. “There has been concern that consumers are less enthusiastic about the feature and performance gains with the latest iPhone 6s/6s+ models. Indeed, more consumers appear to be opting for last year’s iPhone 6 models that are priced $100 lower,” the report stated. The company’s actual results for the quarter will be announced on January 26.

Apple Inc. (NASDAQ:AAPL) also counts a famed institutional investor as one of its top champions: Carl Icahn. His fund, Icahn Capital LP declared holding 52.76 million shares of the largest publicly-traded company in the world, which is, by the way, losing popularity among funds in our system. Over the third quarter of 2015, the number of funds in our database long the tech behemoth fell by 7.6%, to 133. While it was the second-most popular stock among funds at the end of the third quarter, the 133 firms mentioned above hold only 2.8% of the company’s total shares.

Just like International Business Machines Corp. (NYSE:IBM), Advanced Micro Devices, Inc. (NASDAQ:AMD) reported its fourth quarter financial results on Tuesday evening. The small-cap semiconductor company suffered a net loss of $0.10 per share on revenue of $958 million, in-line with consensus expectations, as weakness in demand from the PC market lingered. Nonetheless, shares have slid by 8% today on the results.

Hedge funds seem to be turning their back on Advanced Micro Devices, Inc. (NASDAQ:AMD). According to our database, hedge fund interest declined by more than 36% in the third quarter. As of September 30, only 11 hedge funds among those we track disclosed long positions in the stock. Moreover, the two largest investors (excluding options holders), Cliff Asness’ AQR Capital Management and D. E. Shaw both trimmed their stakes substantially over the third quarter, to roughly 1.7 million shares and 307,819 shares, respectively.

Finally, there’s Metlife Inc (NYSE:MET), which is trading down by approximately 3.3% in afternoon trading. The decline followed yesterday evening’s announcement of a $1.4 billion joint real estate investment venture with the New York State Common Retirement Fund.

Same as in the case above, hedge fund interest in Metlife Inc (NYSE:MET) seems to be falling. Over the third quarter, the number of funds long the stock tumbled by 14.5% to 47. The largest hedge fund investor in our database, Richard S. Pzena’s Pzena Investment Management disclosed a 1% reduction to its position in the stock; the firm reported holding 5.97 million shares of the company as of September 30.

Disclosure: Javier Hasse holds no positions in any of the securities mentioned in this article.