Apple Inc. (AAPL) Is Hurting Your Broker

With Apple Inc. (NASDAQ:AAPL)‘s underperformance over the past year, many tech-heavy investors have partially sat on the sidelines as the broader market continues to march to all-time highs. Investors aren’t the only ones getting hurt by Apple lagging; brokers are getting hurt, too.

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Last week, TD Ameritrade Holding Corp. (NYSE:AMTD) reported earnings for its fiscal third quarter. CEO Fred Tomczyk said nearly all metrics performed well, and the rising yield curve bodes well for its net interest income. Net revenues hit a new record at $725 million, and the company added net new client assets of approximately $11 billion. However, there was one thing holding it back: Apple Inc. (NASDAQ:AAPL).

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Margin trading is an extremely profitable business for all discount brokers, yet TD Ameritrade Holding Corp. (NYSE:AMTD)’s total outstanding client margin balances have remained roughly flat for the past year. A year ago, clients were borrowing an aggregate total of $8.7 billion. That figure is now $8.6 billion.

On the conference call, Tomczyk acknowledged that this is very much related to Apple Inc. (NASDAQ:AAPL), as the Mac maker is one of the most popular investments among margin investors:

So we’ve done some more research on this, and what we found out was basically that if you take our margin accounts, the buying power has not gone up as the market, in general. And the reason for that is our most widely held stock, our most actively traded stock, and our most margined stock is Apple Inc. (NASDAQ:AAPL), which has not participated in the rally, which has drawn in the buying power. So I don’t think there’s anything, as I call it, secular going on other than — a very large company that makes a big part of our margin book has not participated in this rally over the last year.