Apple Inc. (AAPL), Exxon Mobil (XOM) Among Adage Capital’s Biggest Bets

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It’s no secret that Apple Inc. (NADSAQ:AAPL) is the No. 1 stock pick in the hedge fund industry. Let’s take a look at one fund in particular that is bullish on the stock.

Phil Gross and Robert Atchinson founded Adage Capital in 2001. The Boston-based firm manages money for endowments and foundations, with a focus on large-cap stocks. In reviewing the firm’s latest 13F–a filing with the SEC that reveals the majority of its publicly owned securities–we have outlined Adage’s top five holdings.

Phill Gross

Apple Inc. (NASDAQ:AAPL) makes up over 3% of Adage’s 13F portfolio and was its No. 1 stock pick as of its last filing. Apple has one of the industry’s top balance sheets with a debt ratio (debt/assets) of 0%, compared to Microsoft (10%) and Google (7%).

According to our analysis of the company’s secret hedge fund, Apple Inc. (NASDAQ:AAPL) had about $7 billion in cash, cash equivalents, and short-term marketable securities on its last 10-K. The rest of the company’s cash hoard (about $114 billion) is held in a number of different asset classes, including about 40% in corporate securities and 17% in U.S. Treasuries. With an annual dividend payout (2% yield) expected to total a bit below $10 billion this fiscal year, Apple does in fact have the capacity to boost shareholder wealth if it so desires.

Two of Apple Inc. (NASDAQ:AAPL)’s hottest products should continue to help the company generate large amounts of cash. The tech company’s iPhone saw its US market share increase to 48.1%, surpassing Android’s 46.7% for the 12-weeks ending October 28, 2012, according to Kantar Worldwide. Meanwhile, the iPad represented 55% of all tablet shipments in 3Q 2012 according to ABI Research. Interestingly, billionaire Ken Fisher – founder of Fisher Asset Management – was upping his stake nearly 1000% last quarter (check out Ken Fisher’s new picks).

What company came in second?

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