Apple Inc. (AAPL) Insiders Are Bearish, The Smart Money Is Bullish

Apple Inc. (NASDAQ:AAPL) has seen two billionaires jump on board today.

In the eyes of most market participants, hedge funds are perceived as unimportant, old investment tools of the past. While there are over 8000 funds in operation at the moment, we at Insider Monkey choose to focus on the aristocrats of this club, around 450 funds. Most estimates calculate that this group has its hands on most of the hedge fund industry’s total capital, and by paying attention to their best picks, we have unsheathed a few investment strategies that have historically outpaced the S&P 500 index. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 23.3 percentage points in 8 months (see all of our picks from August).

Just as important, bullish insider trading activity is a second way to parse down the investments you’re interested in. Obviously, there are lots of incentives for an executive to get rid of shares of his or her company, but just one, very simple reason why they would initiate a purchase. Plenty of academic studies have demonstrated the market-beating potential of this ICAHN CAPITAL Carl Icahntactic if piggybackers understand what to do (learn more here).

Keeping this in mind, it’s important to take a look at the recent action regarding Apple Inc. (NASDAQ:AAPL).

What does the smart money think about Apple Inc. (NASDAQ:AAPL)?

Obviously, this aggregate data does not include what we’ve learned today: that two billionaires, Carl Icahn and Jim Simons, hold positions in the company. It’s worth noting that Icahn isn’t the only overly-active investor in Apple; another one is detailed below.

At the end of the first quarter, a total of 148 of the hedge funds we track held long positions in this stock, a change of 0% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes considerably.

When looking at the hedgies we track, Ken Griffin’s Citadel Investment Group had the most valuable call position in Apple Inc. (NASDAQ:AAPL), worth close to $2.7662 billion, comprising 4.2% of its total 13F portfolio. Sitting at the No. 2 spot is Greenlight Capital, managed by David Einhorn, which held a $1.0614 billion position; the fund has 16.2% of its 13F portfolio invested in the stock. Other peers that hold long positions include D. E. Shaw’s D E Shaw, Ken Fisher’s Fisher Asset Management and Phill Gross and Robert Atchinson’s Adage Capital Management.

Judging by the fact that Apple Inc. (NASDAQ:AAPL) has faced a stagnant interest from hedge fund managers, logic holds that there lies a certain “tier” of fund managers that elected to cut their positions entirely heading into Q2. Intriguingly, Rob Citrone’s Discovery Capital Management cut the largest investment of the “upper crust” of funds we monitor, valued at an estimated $381.1 million in stock.. Rob Citrone’s fund, Discovery Capital Management, also said goodbye to its call options., about $335.3 million worth.

How have insiders been trading Apple Inc. (NASDAQ:AAPL)?

Bullish insider trading is particularly usable when the company in question has experienced transactions within the past six months. Over the last half-year time frame, Apple Inc. (NASDAQ:AAPL) has seen zero unique insiders purchasing, and 5 insider sales (see the details of insider trades here).

With the results exhibited by Insider Monkey’s tactics, everyday investors should always watch hedge fund and insider trading activity, and Apple Inc. (NASDAQ:AAPL) is an important part of this process.

Click here to learn why you should track hedge funds

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