Was The Smart Money Right About Apple Inc. (AAPL)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 873 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 30th holdings, data that is available nowhere else. Should you consider Apple Inc. (NASDAQ:AAPL) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Is Apple Inc. (NASDAQ:AAPL) a healthy stock for your portfolio? The best stock pickers were taking a bullish view. The number of long hedge fund bets rose by 11 recently. Apple Inc. (NASDAQ:AAPL) was in 138 hedge funds’ portfolios at the end of June. The all time high for this statistic is 152. Our calculations also showed that AAPL ranked 10th among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 127 hedge funds in our database with AAPL positions at the end of the first quarter.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. Recently we came across a high growth stock that has tons of hidden assets and is trading at an extremely cheap valuation. We go through lists like the 10 best growth stocks to buy to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s take a gander at the fresh hedge fund action surrounding Apple Inc. (NASDAQ:AAPL).

Do Hedge Funds Think AAPL Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 138 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from the previous quarter. By comparison, 128 hedge funds held shares or bullish call options in AAPL a year ago. With the smart money’s capital changing hands, there exists an “upper tier” of key hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).

More specifically, Berkshire Hathaway was the largest shareholder of Apple Inc. (NASDAQ:AAPL), with a stake worth $121502.1 million reported as of the end of June. Trailing Berkshire Hathaway was Fisher Asset Management, which amassed a stake valued at $8883.2 million. Citadel Investment Group, D E Shaw, and Adage Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Berkshire Hathaway allocated the biggest weight to Apple Inc. (NASDAQ:AAPL), around 41.46% of its 13F portfolio. Value Star Asset Management is also relatively very bullish on the stock, earmarking 19.58 percent of its 13F equity portfolio to AAPL.

As one would reasonably expect, key hedge funds were leading the bulls’ herd. Harvard Management Co, managed by Rick Slocum, created the biggest position in Apple Inc. (NASDAQ:AAPL). Harvard Management Co had $333.5 million invested in the company at the end of the quarter. Sander Gerber’s Hudson Bay Capital Management also initiated a $267.1 million position during the quarter. The following funds were also among the new AAPL investors: Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors, Zach Schreiber’s Point State Capital, and Aaron Cowen’s Suvretta Capital Management.

Let’s now review hedge fund activity in other stocks similar to Apple Inc. (NASDAQ:AAPL). These stocks are Microsoft Corporation (NASDAQ:MSFT), Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc (NASDAQ:GOOGL), Facebook Inc (NASDAQ:FB), Tesla Inc. (NASDAQ:TSLA), Berkshire Hathaway Inc. (NYSE:BRK-B), and Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM). This group of stocks’ market caps match AAPL’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 172.1 hedge funds with bullish positions and the average amount invested in these stocks was $33502 million. That figure was $145521 million in AAPL’s case. Amazon.com, Inc. (NASDAQ:AMZN) is the most popular stock in this table. On the other hand Tesla Inc. (NASDAQ:TSLA) is the least popular one with only 60 bullish hedge fund positions. Apple Inc. (NASDAQ:AAPL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for AAPL is 66.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 26.3% in 2021 through October 29th and still beat the market by 2.3 percentage points. A small number of hedge funds were also right about betting on AAPL as the stock returned 9.5% since the end of the second quarter (through 10/29) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.