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Will Apple Remain a Hedge Fund Favorite?


Date: Friday, August 26, 2011
Author: New York Times DealBook

Apple is a fan favorite.

Many hedge fund managers count the technology giant among their top stocks. David Tepper of Appaloosa Management recently took a stake, according to Bloomberg data. Tiger Global Management increased its holdings by 81,000 shares in the latest quarter. Lee Ainslie of Maverick Capital owns shares. Greenlight Capital. Jana Partners. The list goes on and on.

Indeed, Apple is the most popular stock for hedge funds. Shares of the company are held by nearly 200 portfolios, according to data from Lionshare, IDC and Goldman Sachs (and posted on the blog ZeroHedge). Google ranks at No. 5.

As a group, the hedge fund managers aren’t highly influential stockholders. Collectively, they own just 4 percent of the stock, according to the data.

There are plenty of reason hedge fund managers are attracted. For one, Apple’s float is pretty large, making it easy for large institutional investors to jump in and out of the stock. Apple has a market value of nearly $350 billion, with more than 70 percent held by big investors. It can also be relatively volatile, offering investors a chance to buy on dips.

The stock, in turn, has been good to hedge fund managers. Since the depths of the financial crisis, shares of the technology company have soared to nearly $400 from $82, chugging along even in the face of economic uncertainty and stock market turmoil.

The question, of course, is whether the money managers remain steadfast following the resignation of Steven P. Jobs as chief executive. Mr. Jobs has long been seen as the driving force behind innovation at the company.

So far investors are remaining cautious. Apple stock was down a little more than 1 percent on Thursday, on the news of his departure.