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In the last six months, Apple's (NASDAQ:AAPL) fall from grace has been one of the biggest market stories. Others have dissected the company's fundamentals better than I can, but I think that an important part of the story has not been fully appreciated: investor money fleeing AAPL needs to go somewhere. Institutional investors, particularly mutual funds, have limited maneuverability in their investment decisions. If they sell one of their technology holdings, they often have to buy another. Because AAPL is so big, it does not take a lot of fleeing AAPL investors to pump up smaller technology stocks.

Three stocks that have been the darlings of the markets in recent months are Nokia (NYSE:NOK), BlackBerry (NASDAQ:BBRY), and Netflix (NASDAQ:NFLX). All three are AAPL's competitors, although NFLX is a challenge in content distribution rather than consumer electronics. While there may be disagreement about how these three companies will do in the future, it is clear that they have the characteristics of speculative investments: they face bigger and better-financed competitors, current profitability is weak, future profitability is uncertain, and they trade at high multiples.

While all three companies have had "good news" in the last six months in terms of product releases or earnings surprises, I believe that their performance has been juiced by former AAPL money looking for a new investment home. Here's the three companies' market caps and trading volume on 3/19 compared to AAPL:


March 19 Market Cap

March 19 Volume


$427 Billion

$8.5 Billion


$7.9 Billion

$415 Million


$10.2 Billion

$515 Million


$12.7 Billion

$178 Million

It does not require a lot of imagination to hypothesize that if these stocks are competing for the same investor money, AAPL's $200 Billion fall could pump up these much smaller competitors. Looking at the six months' price charts, that is exactly what has happened. BBRY has doubled over this time:

(Click to enlarge)

NFLX's recent spike is almost a mirror image of AAPL. I can almost see the money jumping from one stock to another:

(Click to enlarge)

Finally, NOK should be the cautionary tale here. Short interest is up and investors are already starting to bail. Based on the price action of the last week or two, money is finding its way back to AAPL.

(Click to enlarge)

How to Play This

There are plenty of articles out there bemoaning that AAPL stock does not trade on fundamentals, so I do not need to repeat that refrain here. However, an overlooked but connected issue is that AAPL's massive size means that money fleeing AAPL is sloshing around the technology sector and producing all sorts of wacky market movements. Investors in BBRY, NOK and NFLX should be careful because AAPL looks like it has stabilized and a major source of demand for these stocks is drying up.

Disclosure: I am long AAPL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.