Is Apple Inc. (AAPL) Starting To Lose Hedge Fund Support?

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Although aggregate interest decreased and some hedge funds cut their bets, specific money managers have jumped into Apple Inc. (NASDAQ:AAPL) headfirst. Billionaire Stephen Mandel’s Lone Pine initiated a $200+ million position during the fourth quarter. Quant hedge fund Renaissance Technologies might have detected the upward move in the stock and built a $193 million position. RenTech’s large positions aren’t usually high-frequency trading-related. Hari Hariharan‘s NWI Management is a new fund in our list as well. They had a $128 million position at the end of last year. Former Valiant Capital analyst Shashin Shah’s new hedge fund, Think Investments also joined Apple’s hedge fund herd.

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On the negative side, another systematic trading hedge fund, Arrowstreet Capital, dumped its entire $760 million stake in Apple. Arrowstreet is founded by Peter Rathjens, Bruce Clarke, and Harvard professor John Campbell. Other hedge fund heavyweights, namely billionaires David Tepper and George Soros, also sold out their $100+ million positions in the tech giant. Apple is a $750 billion market cap company and it isn’t easy to keep a behemoth growing at a fast enough rate to justify its nearly trillion dollar market value. There are very few consumer markets that they can get into which have the potential to generate substantial revenues. One of them is the car market and we now read news about Apple exploring the possibility of making electric cars. Given Apple Inc. (NASDAQ:AAPL)’s massive cash hoard, the possibility of the iPhone maker buying Tesla Motors Inc (NASDAQ:TSLA) outright is probably a more practical idea. Although Tesla founder Elon Musk has said that an acquisition by Apple is “very unlikely,” the popular entrepreneur and investor did not close the door on the possibility.

We aren’t convinced that this would be the right move for Apple. However, if Tim Cook and his team believe that there is a huge growth potential for their $750 billion market cap company, a $30 billion payment to Tesla shareholders could save them years and keep the company growing. Until something big happens, we believe hedge funds will keep trimming their Apple holdings.

Disclosure: None

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