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Do Hedge Funds Love Apple Inc. (AAPL)?

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·5 min read
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  • AAPL
  • BRK-B

At Insider Monkey, we pore over the filings of nearly 867 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of September 30th. In this article, we will use that wealth of knowledge to determine whether or not Apple Inc. (NASDAQ:AAPL) makes for a good investment right now.

Is Apple Inc. (NASDAQ:AAPL) undervalued? Hedge funds were becoming less hopeful. The number of long hedge fund bets were cut by 18 recently. Apple Inc. (NASDAQ:AAPL) was in 120 hedge funds' portfolios at the end of the third quarter of 2021. The all time high for this statistic is 152. Our calculations also showed that AAPL ranked #10 among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind we're going to review the recent hedge fund action surrounding Apple Inc. (NASDAQ:AAPL).

Phill Gross Adage Capital Phillip Gross
Phill Gross Adage Capital Phillip Gross

Phillip Gross of Adage Capital

Do Hedge Funds Think AAPL Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 120 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from the previous quarter. By comparison, 134 hedge funds held shares or bullish call options in AAPL a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Berkshire Hathaway was the largest shareholder of Apple Inc. (NASDAQ:AAPL), with a stake worth $125529.7 million reported as of the end of September. Trailing Berkshire Hathaway was Fisher Asset Management, which amassed a stake valued at $8615.3 million. Citadel Investment Group, Adage Capital Management, and AQR Capital Management 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 42.78% of its 13F portfolio. Harvard Management Co is also relatively very bullish on the stock, earmarking 15.62 percent of its 13F equity portfolio to AAPL.

Judging by the fact that Apple Inc. (NASDAQ:AAPL) has witnessed a decline in interest from hedge fund managers, it's easy to see that there were a few money managers who sold off their positions entirely last quarter. Interestingly, Sander Gerber's Hudson Bay Capital Management said goodbye to the largest position of the "upper crust" of funds monitored by Insider Monkey, totaling close to $267.1 million in call options. Brad Dunkley and Blair Levinsky's fund, Waratah Capital Advisors, also dumped its call options, about $109.6 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 18 funds last quarter.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Apple Inc. (NASDAQ:AAPL) but similarly valued. We will take a look at Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc (NASDAQ:GOOGL), Amazon.com, Inc. (NASDAQ:AMZN), Meta Platforms, Inc. (NASDAQ:FB), Tesla Inc. (NASDAQ:TSLA), Berkshire Hathaway Inc. (NYSE:BRK-B), and Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM). This group of stocks' market caps are closest to AAPL's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MSFT,250,65877524,12 GOOGL,195,28555087,5 AMZN,242,42553102,-29 FB,248,38569582,-18 TSLA,60,10645154,0 BRK-B,106,19463815,-10 TSM,67,9511459,3 Average,166.9,30739389,-5.3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 166.9 hedge funds with bullish positions and the average amount invested in these stocks was $30739 million. That figure was $146351 million in AAPL's case. Microsoft Corporation (NASDAQ:MSFT) is the most popular stock in this table. On the other hand Tesla Inc. (NASDAQ:TSLA) is the least popular one with only 60 bullish hedge fund positions. Apple Inc. (NASDAQ:AAPL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AAPL is 60.5. Stocks with 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 top 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. A small number of hedge funds were also right about betting on AAPL as the stock returned 17% since the end of the third quarter (through 11/30) and outperformed the market by an even larger margin.

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