Hedge Funds Were Right About Apple Inc. (AAPL)


Apple Inc. (NASDAQ:AAPL) was the most popular stock among hedge funds at the end of September. The number of bullish hedge fund bets also inched up by 1 during the third quarter as well. AAPL was in 153 hedge funds’ portfolio at the end of September. Since then Apple Inc. (NASDAQ:AAP shares returned 11.7% whereas S&P 500 ETF (SPY) returned only 4.2%. Hedge funds’ bullish bets earned them a 7.5 percentage point outperformance. Considering that hedge funds had nearly $23 billion riding on AAPL, they generated an additional profit of $1.7 billion.

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According to most shareholders, hedge funds are perceived as slow, old investment vehicles of years past. While there are over 8000 funds in operation at present, experts at Insider Monkey, a website specializing in hedge funds, choose to focus on the bigwigs of this group, approximately 700 funds. These money managers oversee the lion’s share of the smart money’s total capital, and by observing their first-class equity investments, Insider Monkey has brought to light several investment strategies that have historically outperformed Mr. Market. For instance Insider Monkey’s small-cap hedge fund strategy exceeded the S&P 500 index by 18 percentage points a year for a decade in their back tests.

What have hedge funds been doing with Apple Inc. (NASDAQ:AAPL)?

Fourth quarter data will be available in about 6 weeks. At the end of the third quarter, a total of 153 of the hedge funds tracked by Insider Monkey were long in this stock, a change of 1% from the second quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings meaningfully.

When looking at the hedgies followed by Insider Monkey, Icahn Capital holds the number one position in Apple Inc. (NASDAQ:AAPL). Icahn Capital LP has a $5.3 billion position in the stock, comprising 15.8% of its 13F portfolio. On Icahn Capital LP’s heels is D E Shaw, founded by David E. Shaw, holding a $1.1743 billion position; the fund has 1.5% of its 13F portfolio invested in the stock. Some other peers that are bullish encompass Ken Fisher’s Fisher Asset Management, Philippe Laffont’s Coatue Management and David Einhorn’s Greenlight Capital.

With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Balyasny Asset Management, managed by Dmitry Balyasny, initiated the biggest call position in Apple Inc. (NASDAQ:AAPL). Balyasny Asset Management had 565.2 million invested in the company at the end of the quarter. Mike Masters’s Masters Capital Management also made a $201.5 million investment in the stock during the quarter. The following funds were also among the new AAPL investors: Benjamin A. Smith’s Laurion Capital Management, Michael Novogratz’s Fortress Investment Group, and Dmitry Balyasny’s Balyasny Asset Management.

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