Hedge Funds Are Betting On Apple Inc. (AAPL)


In this article we will check out the progression of hedge fund sentiment towards Apple Inc. (NASDAQ:AAPL) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Apple Inc. (NASDAQ:AAPL) has seen an increase in activity from the world’s largest hedge funds lately. AAPL was in 123 hedge funds’ portfolios at the end of March. There were 119 hedge funds in our database with AAPL holdings at the end of the previous quarter. Our calculations also showed that AAPL is among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Today there are numerous tools stock market investors can use to value stocks. Some of the most useful tools are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the top money managers can beat the S&P 500 by a healthy margin (see the details here).

David E. Shaw of D.E. Shaw

David E. Shaw of D.E. Shaw

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a peek at the recent hedge fund action encompassing Apple Inc. (NASDAQ:AAPL).

What does smart money think about Apple Inc. (NASDAQ:AAPL)?

Heading into the second quarter of 2020, a total of 123 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards AAPL over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is AAPL A Good Stock To Buy?

More specifically, Berkshire Hathaway was the largest shareholder of Apple Inc. (NASDAQ:AAPL), with a stake worth $62340.6 million reported as of the end of September. Trailing Berkshire Hathaway was Citadel Investment Group, which amassed a stake valued at $3594.2 million. Fisher Asset Management, AQR Capital Management, and D E Shaw were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Berkshire Hathaway allocated the biggest weight to Apple Inc. (NASDAQ:AAPL), around 35.52% of its 13F portfolio. Crake Asset Management is also relatively very bullish on the stock, dishing out 12.79 percent of its 13F equity portfolio to AAPL.

As industrywide interest jumped, some big names have jumped into Apple Inc. (NASDAQ:AAPL) headfirst. Alkeon Capital Management, managed by Panayotis Takis Sparaggis, assembled the most outsized position in Apple Inc. (NASDAQ:AAPL). Alkeon Capital Management had $334.6 million invested in the company at the end of the quarter. Benjamin A. Smith’s Laurion Capital Management also made a $156.2 million investment in the stock during the quarter. The other funds with brand new AAPL positions are Michael Larson’s Bill & Melinda Gates Foundation Trust, Alex Sacerdote’s Whale Rock Capital Management, and Scott Bessent’s Key Square Capital Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Apple Inc. (NASDAQ:AAPL) but similarly valued. These stocks are Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc (NASDAQ:GOOGL), Alphabet Inc (NASDAQ:GOOG), and Alibaba Group Holding Limited (NYSE:BABA). All of these stocks’ market caps match AAPL’s market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AMZN,251,32864433,49 GOOGL,167,11083440,4 GOOG,147,15254756,-1 BABA,167,19433098,-3 Average,183,19658932,12.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 183 hedge funds with bullish positions and the average amount invested in these stocks was $19659 million. That figure was $74756 million in AAPL’s case. Amazon.com, Inc. (NASDAQ:AMZN) is the most popular stock in this table. On the other hand Alphabet Inc (NASDAQ:GOOG) is the least popular one with only 147 bullish hedge fund positions. Compared to these stocks Apple Inc. (NASDAQ:AAPL) is even less popular than GOOG. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd and still beat the market by 15.6 percentage points. Hedge funds were also right about betting on AAPL as the stock returned 25.7% so far in the second quarter and outperformed the market by an even larger margin.

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

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