5 Stocks Hedge Funds Are Talking About

3. Apple Inc. (NASDAQ:AAPL)

Number of Hedge Fund Holders: 135

Ranking 3rd on our list of the 10 stocks hedge funds are talking about is Apple Inc. (NASDAQ:AAPL). In the third quarter of 2023, Apple Inc. (NASDAQ:AAPL) reported earnings of $1.46 per share, with a 1% year-over-year decline in revenue to $89.5 billion. The performance was supported by an all-time high in services revenue and steady iPhone sales. Additionally, iPhone-related revenue reached $43.8 billion, reflecting a 3% year-over-year increase and aligning with expectations.

Polen Focus Growth Strategy made the following comment about Apple Inc. (NASDAQ:AAPL) in its Q3 2023 investor letter:

“Apple Inc. (NASDAQ:AAPL) has been a meaningful detractor to relative performance in recent quarters as the company has seen moderate earnings growth but substantial P/E multiple expansion. In our view, Apple is a great business but one with more risk factors related to China than we would prefer: relatively low EPS growth, which is being heavily aided by share buybacks (slower EPS growth than every single company in our Portfolio); and a high P/E ratio for this level of growth. This combination rarely leads to excellent long-term share price performance in our experience.

Last quarter, Apple’s new iPhone introduction failed to generate much excitement, with iPhone units declining year over year. There was also news that the Chinese government was blocking its employees from using iPhones. Apple is exposed to the rising geopolitical tensions between the U.S. and China. The latter is responsible for much of the company’s incremental iPhone growth, and nearly all of Apple’s supply chain is China-based. The relatively small action by the Chinese government was a reminder to investors that Apple is not immune from geopolitics or other risks.”