Large investors were net sellers of Apple shares in the third quarter, a volatile period that coincided with the late August resignation of founder Steve Jobs and ended five days before his death.
Investors with at least $100 million in their U.S. equity portfolios scooped up more than 38 million shares, but dumped more than 90 million shares, for a net sale of more than 52 million shares, according to EDGAR Online.
During the same period, however, some of the largest, most high profile hedge fund managers either took initial positions in the computer and consumer electronics company or lifted or maintained existing, large stakes.
For example, Apple is the largest holding of at least one dozen top hedge funds, including Tiger Cubs Stephen Mandel of Lone Pine Capital, John Griffin of Blue Ridge Capital, and Philippe Laffont of Coatue Management, as well as Ken Griffin’s Citadel, David Shaw’s D.E. Shaw, David Einhorn’s Greenlight Capital, Mark Kingdon’s Kingdon Capital, and GLG, owned by MAN Group.
A number of others count Apple as their second largest holding, including Tiger Cubs Miura Global Management, founded by Pasco Alfaro, and Chase Coleman’s Tiger Global, as well as Renaissance Technologies and Adage Capital Partners.
Meantime, there were yet more Tiger Cubs among the four hedge funds that took large new stakes in the third quarter. The cubs, Tiger Cubs: Andreas Halvorsen of Viking Capital and Roberto Mignone of Bridger Management, were joined by John Overdeck’s Two Sigma and Brookside Capital, the hedge fund arm of Bain Capital.
Of course, it is not clear from the mandatory quarterly filings when these investors bought their stock — although a number of them have held the shares for well over a year — or what price they paid. The stock, however, surged nearly 14 percent in the third quarter, although it is only up 3 percent since Jobs’ October 5 death.
Meanwhile, many investment banks still maintain their highest rating on their stock. They include Barclays, which on Tuesday repeated its Overweight rating and its whopping $555 price target, which suggests a 44 percent increase from its current price despite a better-than 2.2 percent gain the day the report was circulated.
“We continue to believe Apple’s market cap can see further gains as it extracts more profits out of the traditional PC and mobile phone industries,” Barclays told clients in a note. The bank acknowledged that Apple’s stock has suffered lately due to what it calls “demand/build” concerns surrounding the iPad and iPhone “build” concerns. And while it concedes that iPad concerns have some merit, they should not pose a long-term problem. It also asserted iPhone concerns seem overblown.
“We believe the iPad still stands out as the industry standard in terms of software integration,” Barclays states in the report, adding that iPhone demand still seems strong.
Last month, Credit Suisse Securities raised its 2012 estimate and repeated its Outperform rating and $500 target price, explaining “Apple is well positioned to maintain momentum across key product lines driven by continued evolution and innovation in hardware, software and services.” At the time its stock was trading around $408.
The hedge fund community, apparently, seems to think these heady price targets are easily doable.
