Apple Inc. (NADSAQ:AAPL) investors have likely been bombarded with all sorts of opinions on what their shares will do next. Let’s take a look a one very bullish reason why it might not be a bad idea to initiate a value-based position in Apple Inc. (NASDAQ:AAPL) at the start of February.
Though exact estimates vary, it is widely accepted that about half of all American households hold at least one share of a publicly traded company’s stock, be it through direct or indirect ownership. Keeping this reality in mind, it’s self-evident that the legendary investors of our day—the David Einhorns and the Warren Buffetts, if you will—are truly the crème de la crème.
At Insider Monkey, we teamed up with MarketWatch to create the Billionaire Hedge Fund Index to measure just how talented the smart money’s elite is at stock picking. The Index tracks over 40 billionaire fund managers and uses a consensus-based weighting criterion to order its holdings. After a full year of its existence, the results are truly exemplary. In 2012, this index has returned 24.3% vs. 16.0% for the S&P 500 ETF. That’s an outperformance of 8.3 percentage points.
Historically speaking, imitating hedge funds’ top picks outperformed the market by 2 percentage points a year, and their most popular small-cap investments generate an even better performance. Since launching our newsletter, our small-cap strategy has returned 25.4% since the end of August, versus a 7.4% return for the S&P 500 ETF (here’s how you can start using this market-dominating strategy today).
With that being said, we’re going to reveal the top five holdings of the Billionaire Hedge Fund Index, so retail investors can begin to learn how to best prepare their portfolios for the future.
Apple Inc. (NASDAQ:AAPL) was tied for first among the 40-plus billionaires tracked by the Index, with 18 mega-investors holding at least $10 million worth of the stock at the end of the last 13F-filing period with the SEC. Apple’s swoon has been well-documented by all corners of the blogosphere, but shares are still up more than 11% since the start of 2012.
The tech giant is clearly oversold at its current levels, and the company has a number of potential growth drivers—a deal with China Mobile, a smart TV and a dividend hike among chief importance—that can push shares to a fairer price. Some of the top-name investors in Apple Inc. (NASDAQ:AAPL) include David Tepper, Dan Loeb and David Einhorn (see David Einhorn’s newest stock picks).
Google Inc (NASDAQ:GOOG) also has 18 billionaires invested, and since the beginning of last year, it has outperformed Apple Inc. (NASDAQ:AAPL) by more than 2 percentage points. Lone Pine Capital’s Stephen Mandel, one of the most successful of Julian Robertson’s “Tiger Cubs,” owns the most Google shares of the 400 or so hedge funds we track.
Amid continually declining cost-per-click averages, Google Inc (NASDAQ:GOOG) beat the Street’s earnings estimates in its latest quarterly financials, but revenues fell a bit flat. Investors have still been bullish on the company’s prospects in 2013, and its growth story is still clearly intact. One intriguing project to watch is Google’s in-house development of a so-called “X Phone.” It’s too early to predict what an entry into the smartphone manufacturer’s circle will mean for shareholders, but ardent investors should stay on top of this situation.
Besides Google Inc (NASDAQ:GOOG) and Apple Inc. (NASDAQ:AAPL), who’s the best of the rest?