Apple Inc. has lost its appeal with hedge funds, which are moving away from their stocks in favor of social media stocks. In the fourth quarter of 2015, Apple shares were the most sought after by the hedges– fund managers, but they turned into an asset that investors weren’t able to sell quickly enough in the first quarter of 2016, according to a report by Market Watch.
Hedge funds are losing interest in Apple
In the first quarter, Apple stock went from being a gadget-making darling to being an outcast for hedge funds. FactSet came to this conclusion after a detailed examination of the quarterly public filings of the 50 largest hedge funds. These funds are required to publicly disclose all long positions of at least $ 100 million held at the end of each quarter.
Overall, the investment managers unloaded tech stocks worth around $ 18.7 billion, and the tech sector was the biggest selling among the top 50 hedge funds. The iPhone company had to bear the brunt of this technology divestiture as hedge funds lost $ 7.1 billion in Apple in the first quarter.
The biggest hedge fund seller in the first quarter was activist investor Carl Icahn, who sold Apple shares for $ 4.3 billion. However, not everyone avoids Apple stocks. Warren Buffett’s Berkshire Hathaway revealed a $ 1 billion stake in the iPhone maker in the first quarter.
Concerns about Apple Inc. intensified after announcing the first drop in quarterly revenues in 13 years in April. Investors sold Apple shares after poor first quarter results, and analysts fear the company may no longer be able to increase sales. This is surprising, however, as the iPhone maker is one of the most valuable companies in the world and boasts a market capitalization of $ 516 billion.
Facebook becomes favorite
When the hedge funds abandoned Apple, they took over shares of Facebook. FactSet data showed that major hedge funds have acquired shares in the social media giant worth more than $ 3 billion. their move makes sense given Facebook gained 9% in the first quarter while Apple Inc. grew 3.5% in the same period. Facebook is up 12.1% year on year while Apple is down nearly 10%.
“The drop in appetite for Apple stocks also comes as hedge fund investors cut their exposure to equities during a period in which the Nasdaq Composite Index is on course to record its worst loss. annual, down 4.8%, in about eight years the tech-loaded index has fallen 41%. Meanwhile, other benchmarks have mostly languished, trading in a narrow range this year. ” , indicates the report.
This year has not even been a good year for the hedge fund industry. Hedge Fund Research data shows (measured using the HFRI Composite Weighted Index), managers fell 0.7% on average in Q1 2016 compared to an increase of 0.7% for the S&P 500.