Artisan Partners Limited Partnership, a high value-added investment management firm, published its ‘Artisan Value Fund’ fourth quarter 2020 investor letter – a copy of which can be downloaded here. A return of 20% was recorded by its Investor Class: ARTLX, 20.05% by its Advisor Class: APDLX, and 20.07% by its Institutional Class: APHLX, in the fourth quarter of 2020, all outperformed its Russell 1000 Value Benchmark that delivered a 16.25% return and its Russel 1000 Index that was up by 13.69% in the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.
Artisan Value Fund, in their Q4 2020 investor letter, mentioned Apple Inc. (NASDAQ: AAPL) and emphasized their views on the company. Apple Inc. is a Cupertino, California-based technology company that currently has a $2.01 trillion market capitalization. Since the beginning of the year, AAPL delivered a -9.57% return, but its 12-month gains are still up by 109.37%. As of March 18, 2021, the stock closed at $120.53 per share.
Here is what Artisan Value Fund has to say about Apple Inc. in their Q4 2020 investor letter:
“We fully exited position in Apple. Apple is a global designer, manufacturer and seller of smartphones, personal computers, tablets, wearables and accessories, which also has a rapidly growing and highly profitable services business. We had been shareholders since 2011, owning Apple in various sizes throughout our investment campaign. Apple remained in the portfolio all these years because the market systematically assigned the company an undemanding asking price despite characteristics which should command a premium. Our differentiated view was Apple had “won” in the smartphone business along with their other product categories as its iOS operating system tied users into an ecosystem and rising services adoption led to increased switching costs for users. Survey data showed users were as happy with Apple products as ever, too. With all these traits in place, the result was a rising installed base and each user becoming more valuable due to services attach rates. When combined with an average asking price, tremendous free cash flow generation, and management pointing all cash flow back to shareholders, the odds of a strong return were heavily tilted in our favor. Apple is likely to remain an extraordinary business for years to come, but we can’t separate the business from the asking price. At over 30X earnings and $2 trillion in value, Apple needs to create opportunities worth hundreds of billions for shareholders to now justify the asking price. So, we exited a long-time holding, but we know being disciplined and recycling capital into better opportunities is the appropriate decision.”
Our calculations show that Apple Inc. (NASDAQ: AAPL) ranks 10th in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Apple Inc. was in 146 hedge fund portfolios, compared to 134 funds in the third quarter. AAPL delivered a -5.26% return in the past 3 months.