One of the positions that eclipsed Google’s in size was not a long position, but rather a position of 660,000 shares underlying put options in Apple Inc. (NASDAQ:AAPL), which were valued at $72.85 million. Highbridge also owns a smaller long position in Apple of 163,841 shares valued at $18.09 million, with both positions having been slashed by at least 50% during the fourth quarter. Apple Inc. (NASDAQ:AAPL) of course enjoyed strong returns in the first quarter, of 13.17%, and sentiment remains mostly bullish towards the iPhone maker, with it still trading at a P/E of just 13.
While official numbers have yet to come in, it appears the Apple Watch may exceed the more muted recent sales expectations for the device, which has been pegged to sell anywhere from 20 million to 100 million units in its first calendar year on sale. Apple Inc. (NASDAQ:AAPL) is also expected to announce moves to further increase shareholder value during its next earnings report later this month, something activist investor Carl Icahn (the largest Apple shareholder in our database) has aggressively pushed for in recent months.
Hewlett-Packard Company (NYSE:HPQ) is another of Highbridge’s top tech picks, though one that didn’t perform as well in the first quarter. Highbridge owns 1.52 million shares valued at $60.92 million in the computer manufacturer. Shares of Hewlett-Packard Company (NYSE:HPQ) tumbled by 21.96%, and analysts believe it may take a miracle acquisition to turn things around. Despite the doom and gloom, shares of Hewlett-Packard Company (NYSE:HPQ) more than doubled over the course of 2013 and 2014, thanks to its expansion into services sectors like enterprise and cloud. Richard Pzena’s Pzena Investment Management remains a believer in HP’s turnaround efforts, holding a position of 18.23 million shares.
QUALCOMM, Inc. (NASDAQ:QCOM) also suffered through a poor quarter, as shares dipped by 6.17%. That prompted fund JANA Partners to launch a new activist campaign concerning Qualcomm, as it revealed a large new position and outlined some of the many ways in which QUALCOMM, Inc. (NASDAQ:QCOM) could improve its operations, as well as shareholder value. Among other things, JANA has expressed that Qualcomm should spin off its chip business, cut costs, shake up its board, and accelerate its already announced share buyback measures. Despite under-performing the S&P 500 over the past five years, Qualcomm CEO Steve Mollenkopf was one of the top-paid executives in 2014, earning $60 million. In addition to JANA’s large new position, billionaire Ken Fisher also has a large position in Qualcomm.
As you see, hedge funds and other big money managers like Dubin prefer to have the largest amounts of their capital invested in large and mega-cap stocks because these companies allow for much greater capital allocation, which is important taking into account that the global hedge fund industry has swollen to nearly $3.0 trillion. That’s why if we take a look at the most popular stocks among funds (we track more than 700 in our database), we won’t find any mid- or small-cap stocks there. However, our backtests of hedge funds’ equity portfolios between 1999 and 2012 revealed that the 50 most popular stocks among hedge funds underperformed the market by 7 basis points per month. On the other hand, we found that we can combine the pricing inefficiencies among small-cap picks with hedge fund expertise and obtain significant results. This was confirmed through backtesting and in forward tests of our small-cap strategy since 2012. The strategy, which involves imitating the 15 most popular small-cap picks among hedge funds managed to provide gains of more than 137%, beating the broader market by over 82 percentage points through the end of March (see the details).