Were hedge funds right about Apple Inc. (AAPL)?

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Our extensive research has shown that emulating smart money can generate significant returns for retail investors, which is why we follow nearly 900 active top fund managers and analyze their 13F quarterly returns. Stocks bought heavily by hedge funds have historically outperformed the market, although there is no shortage of high profile defaults, such as hedge fund losses in 2018 on Facebook and Apple. Let’s take a closer look at what the funds we track think of Apple Inc. (NASDAQ: AAPL) in this article.

East Apple Inc. (NASDAQ: AAPL) a wonderful investment now? The big investors were in a pessimistic mood. The number of bullish hedge fund positions was recently reduced by 19. Apple Inc. (NASDAQ: AAPL) was listed in 127 hedge fund 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 rank).

In the financial world, there are a number of tools available to investors for valuing stocks. A pair of the lesser-known tools are the hedge fund and insider trading indicators. We have shown that historically those who follow the best picks of the best fund managers can outperform larger indices by a solid amount. Insider Monkey’s monthly stock picks have returned 206.8% since March 2017 and have outperformed S&P 500 ETFs by more than 115 percentage points (see details here). This is why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

best defensive stocks to buy according to ken fisher

Ken Fisher of Fisher Asset Management

At Insider Monkey, we scour multiple sources to uncover the next big investing idea. For example, lithium mining is one of the fastest growing industries right now, so we’re looking at stock locations like this. emerging lithium stocks. We go through lists like the top 10 electric vehicle stocks to pick the next Tesla that will deliver 10x yield. Even though we only recommend positions in a tiny fraction of the companies we analyze, we check as many stocks as possible. We read letters from hedge fund investors and listen to equity pitches at hedge fund conferences. You can sign up for our free daily newsletter on our homepage. We will now discover the new action of the hedge funds including 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 on 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 on AAPL a year ago. With hedge fund positions undergoing their usual ebb and flow, there is a “top tier” of notable hedge fund managers who were significantly increasing their holdings (or already accumulating large positions).

The largest stake in Apple Inc. (NASDAQ: AAPL) was held by Berkshire Hathaway, which said it held shares worth $ 108,363.6 million at the end of December. It was followed by Fisher Asset Management with a position of $ 7,672.7 million. Other optimistic investors for the company included Citadel Investment Group, Adage Capital Management and Millennium Management. In terms of the portfolio weights assigned to each position, Berkshire Hathaway assigned the largest 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% of its 13F equity portfolio to AAPL.

Given that Apple Inc. (NASDAQ: AAPL) has seen a drop in sentiment in the overall hedge fund industry, logic dictates that there is a cult of fund managers who have chosen to cut all of their funds. assets by the end of the first quarter. Oddly enough, Jeffrey Talpins’ Element Capital Management dumped the biggest investment from the “top crust” of funds tracked by Insider Monkey, totaling nearly $ 211.4 million in stocks, and the Bill & Melinda Gates Foundation Trust of Michael Larson was right behind this move, as the fund sold for around $ 133 million. These moves are important to note, as total hedge fund interest fell by 19 funds at the end of the first quarter.

Now let’s take a look at the hedge fund activity in other stocks – not necessarily in the same industry as Apple Inc. (NASDAQ: AAPL) but of similar value. We will be looking 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). The market value of this group of shares corresponds to the market value of the AAPL.

[table] Ticker, number of HF with positions, total value of HF positions (x1000), change of HF MSFT position, 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 Medium, 172.7,30187053, -5.6 [/table]

Check the table here if you have 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 $ 30,187 million. That figure was $ 130,910 million in the case of AAPL. Facebook Inc (NASDAQ: FB) is the most popular stock in this table. On the other hand, Tesla Inc. (NASDAQ: TSLA) is the least popular with only 62 bullish hedge fund positions. Apple Inc. (NASDAQ: AAPL) isn’t 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 a 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 the 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 6 and beat the market 6.7 percentage points. A small number of hedge funds were also right to bet on AAPL, but not to the same extent, as the stock has returned 20% since the end of the first quarter (through August 6) and has outperformed the market.