Vito Racanelli in yesterday Barron's quotes Aaron Cohen as to a very plausible reason for the drop from 700. Cohen cites the drop of other stocks which became 5% of the S&P, XOM and MSFT for instance. As they rise at a much faster pace than the rest of the market they begin to comprise more than 6-7% of a fund manager's portfolio. For mere reasons of diversification the manager is forced to sell the stock to rebalance. It does make a lot of sense in light of the pristine fundamentals of AAPL. Cohen believes that AAPL will not rise significantly until the S&P sees larger gains.
I do not know if there is another post on this Board which mentions the article. I did not go through the plethora of useless posts here, many of which are racist or show a total ignorance about investing.
Many funds have maximum allocation percentages for their funds, so if AAPL represents a large percentage (over 7%?), they may be forced to sell AAPL to balance the portfolio. I also read somewhere that hedge funds do not need to disclose their positions until February. When they do disclose their holdings, it would be prudent to have a balanced portfolio. In other words, they can use AAPL to boost gains, but it would be wise to show a diversified portfolio to investors. If you look at 8 of the 10 best performing hedge funds of 2012, they all had AAPL as a significant part of their holdings. This MAY be the reason for the large sell off. I recently noticed that institutional investors accounted for 68% of AAPL which is down 2% in the past 4 months. That is pretty significant. I've heard similar logic as to why AAPL will never be a part of the DOW.
I myself am HEAVILY overweight APPL as it's stock price has gone up 1000 percent since my initial investment. Still, I refuse to sell AAPL in order to balance my portfolio which goes against a basic investment principle, diversification.
I don't know if i buy this explanation. AAPL certainly has been a significant holding with many money / fund mgr's, esp. as the stock had risen from 360+ all the way up to 700+, all the while the S&P was lower than at present. Some funds have this " % of S&P " as a benchmark, but it's by no means a hard and fast rule.
I was going to say (and am saying) basically the same thing. The market was lower when AAPL was 30% higher. Also there is no allocation checker on a daily basis at these funds. I can see reallocation at the end of the year along w/tax selling as being at least part of the sell off. But I would say now is time to bring more shares in at a lower price. That is, by the logic of Aaron Cohen it is a screaming buy at this time