Apple’s worst trading day in four months has left many hedge fund portfolios very vulnerable. After all, it was the most popular stock among hedge funds at the end of the third quarter, found in 231 portfolios. Several high profile funds did do some serious selling, including Tiger Cub Stephen Mandel’s Lone Pine Capital, which unloaded nearly 618,000 shares, or about 43 percent of its total position. But it still retained about 805,000 shares. Even so, several hedge funds that did sell shares still held on to most of their holdings, including Mandel’s former Tiger Cubs Coatue Management, which still owns more than 1.4 million shares after trimming its position by nearly 6 percent; Tiger Global, which still owns 1.3 million shares; and Blue Ridge Capital. Other big holders include Tiger Management, D.E. Shaw, Greenlight Capital, Viking Capital, Third Point, Highbridge and Appaloosa Management. One prominent hedge fund manager who has sold some shares in recent months says he has no plans to bottom-fish the stock, which is now trading at $551.30. “I think it is less attractive now than it was before,” he tells me. “Things changed. Others are catching up.” In other words, Apple no longer enjoys those astounding monopolies for its ground-breaking products.
CNBC reported that Citigroup’s Private Bank put SAC on watch on its hedge fund platform. It is not a sell signal, but it means the bank is monitoring the situation. It seems Morgan Stanley recently did a similar thing after the latest insider trading case became known. But if investors do redeem their stake, you can’t blame them. After all, SAC without Steve Cohen is not SAC, despite assurances six months ago from the company that there is a deep bench to take over the firm.
Reports of the death of the fund-of-funds industry are premature. This is the message from a new study by fund administrator SEI. It found that despite a downward spiral in assets, 72 percent of investment professionals think the vehicles still play a valuable role in institutional investment portfolios. The paper points out that investors and consultants still believe funds of funds have a little time to reinvent their business models to address investor dissatisfaction and concerns over transparency, liquidity, and fees. However, 68 percent of investors and consultants warned that fees are too high for the value delivered.
You think Greece is out of the woods now that it has agreed to buy back some of its debt? Not so fast. It seems hedge funds holding the paper are threatening to “blow up the deal” as they stubbornly hold out for a higher price. The hedge funds are betting other investors — Greek banks and short-term investors — will tender and they will be able to get a higher price down the road.
