This Week in Tech: Apple Inc. (AAPL), Twitter Inc (TWTR), and More

Despite the major indexes being little changed, a lot has occurred in the technology sector in the past week. Major products have been launched, guidance has been raised, and new features have been added.

In this article, let’s take a closer look at the events that occurred to Apple Inc. (NASDAQ:AAPL), Twitter Inc (NYSE:TWTR), Intel Corporation (NASDAQ:INTC), Tesla Motors Inc (NASDAQ:TSLA), and SolarCity Corp (NASDAQ:SCTY) this week and assess the hedge fund sentiment towards these stocks.

At Insider Monkey, we track around 740 hedge funds and institutional investors. Through extensive backtests, we have determined that imitating some of the stocks that these investors are collectively bullish on, can help retail investors generate double digits of alpha per year. The key is to focus on the small-cap picks of these funds, which are usually less followed by the broader market and allow for larger price inefficiencies (see the details here).

It certainly feels like the Apple Inc. (NASDAQ:AAPL) of old is back. Shares of the tech company actually rallied around a new product release, something that hasn’t happened in a long time (with the exception of before Apple’s introduction of larger iPhones). In fact, the company’s stock surged by over 11% this week, and helped put all three major indexes in positive territory this week too.  While Apple Inc. (NASDAQ:AAPL) CEO Tim Cook’s talk about the company focusing on augmented reality over virtual reality likely helped boost sentiment, it was mainly Apple’s introduction of two new iPhones, the iPhone 7 and 7 Plus, that stole the show. Due to strong demand from many customers who had older iPhone models, from others interested in the iPhone 7’s wireless headphones, and from demand from former Samsung customers after the company’s recent recall of certain phones, demand for the iPhone 7 has outperformed expectations. Given Apple’s still reasonable valuation of 12.9 forward P/E and around 2% yield and the prospect of potential big buybacks on the way in 2017 if the U.S. government provides a one-time tax deal on foreign profits, it’s not hard to see why investors are so enthusiastic.  Warren Buffett‘s Berkshire Hathaway raised its stake in Apple Inc. (NASDAQ:AAPL) by 56% to over 15 million shares during the second quarter.

Similar to Apple’s stock, Twitter Inc (NYSE:TWTR) shares also had a good week, rising by over 5.5% from Monday to Friday. Although sale rumors around the social media company have dampened a bit as many traders expect the board to give CEO Jack Dorsey a few more quarters to put into effect his turnaround plan, shares of the company nevertheless still rallied due to a successful NFL Thursday Night Football game streamed on the website. Twitter Inc (NYSE:TWTR) bulls hope the live streams will bring in more users, increase engagement, and improve monetization. Of the around 750 funds we follow, 30 owned shares of Twitter Inc (NYSE:TWTR) at the end of the second quarter, up by three funds from the previous quarter.

On the next page, we examine the events that occurred to Intel Corporation, Tesla Motors Inc, and SolarCity Corp.

Rumors of the demise of the PC market might be a little exaggerated, as Intel Corporation (NASDAQ:INTC) recently upped its third quarter revenue outlook to $15.3-$15.9 billion, versus the previous range of $14.4-$15.4 billion. In addition, the management increased the midpoint of its gross margin expectations for the time period to 63% from the previous 62%. Given the stronger outlook, it’s not surprising that Intel shares gained over 6% during this trading week and hit a 52-week high on Friday. Despite the rally, shares of the stock still yield almost 2.8% at current prices. According to our data, 57 funds had a bullish position in Intel Corporation (NASDAQ:INTC) at the end of June, up by three funds from the previous quarter.

Traders seem to think Tesla Motors Inc (NASDAQ:TSLA)‘s merger with SolarCity Corp (NASDAQ:SCTY) is less likely to win approval from shareholders after the latter sank to a 52-week low on Friday. At its current price of $17.50, and Tesla’s current price of $205.4, investors are pricing SolarCity nearly 22% below what the price of its stock would be if the merger between the two closed successfully (Tesla is offering 0.11 shares of its stock for each share of SolarCity under the terms of the proposed merger). The solar sector has struggled recently with oversupply and the lack of strong demand due to the extension of renewable energy tax credits.

Nevertheless, it wasn’t a bad week for Tesla shareholders as shares of the company rallied by 5.6%. Although some investors weren’t too happy after hearing that the upcoming Chevy Bolt will have a 238-mile range, versus the Model 3’s likely 215 miles (with both vehicles likely costing around $35,000-$37,500), the fact that the SolarCity merger looks a little less likely and the news that Tesla won a 20 MW energy storage contract calmed many bulls. For Tesla bulls, the company isn’t just a car company. It can be an energy storage company too, with or without SolarCity.

A total of 26 funds tracked by Insider Monkey owned shares of SolarCity and 36 investors were long Tesla Motors Inc (NASDAQ:TSLA) at the end of June.

Disclosure: none