Seeking Alpha

A worrying trend or a contrarian indicator? Leon Cooperman's Omega Advisors was far from the...

A worrying trend or a contrarian indicator? Leon Cooperman's Omega Advisors was far from the only big hedge fund to unload its Apple (AAPL) position in Q4. Joining Omega were Dan Loeb's Third Point, Thomas Steyer's Farallon Capital, Barry Rosenstein's Jana Partners, John Burbank's Passport Capital, and Eric Mindich's Elton Park Capital. On the other hand, David Einhorn's Greenlight Capital raised its stake to 1.3M shares from 1.1M and bought 275K call options ahead of its Prop. 2 suit (13F). Apple has historically been a hedge fund darling.
Comments (37)
  • JEFF G
    , contributor
    Comments (73) | Send Message
     
    I think it tells us the selling is over in the short-term, Id be a buyer.
    14 Feb 2013, 06:37 PM Reply Like
  • Remyngton
    , contributor
    Comments (354) | Send Message
     
    So they sold in the $400's after the stock topped $700 in the 3rd Quarter ???

     

    What ever happened to buy low , sell high ?
    14 Feb 2013, 06:44 PM Reply Like
  • vireoman
    , contributor
    Comments (883) | Send Message
     
    Having sold out of a position in Q4 means they sold at anywhere between $659 and $532. Having ridden the stock up to above $700, it would have been stupid of them to NOT have sold most, if not all, of their shares by that point. I now have a position I established below the $532 closing price of Q4. The stock price doesn't have to surpass $700 to make me happy.
    14 Feb 2013, 09:01 PM Reply Like
  • thibaud
    , contributor
    Comments (165) | Send Message
     
    Not buying. I remember when Blackberries were the coolest thing in the universe, too

     

    Apple has already ceased to be the Coolest Company On the Planet. Build orders for iPhone 5s have been slashed by one-third. That can't all be due to replacement by the iPhone 5S.
    http://read.bi/YbIIeI

     

    Apple remains a great company, but so was RIMM/Blackberry in its day, as was Sony, as was Nikon etc etc. The laws of physics apply to AAPL as they do to any other consumer electronics company, which are that, unlike, say, an oil company, a gadget-maker's competitive advantage period can shrink to nothing virtually overnight.

     

    Apple's products, while still cool and generating cash, are no longer the coolest on the planet. Already, the hipsters - and not just the hipsters - are shifting to the Samsung product whose screen area is over 33% larger than the iPhone's. And Samsung has deep marketing pockets and will continue to spend hundreds of millions to spread awareness even further and influence consideration and purchase.

     

    Samsung's product has caught up with and in the most crucial area - photo-sharing and display - even surpassed Apple's product.

     

    This will continue to cause Apple's iPhone sales to underperform expectations - not financial expectations necessarily, but the popular expectation of Apple continuing to grab all the buzz and monopolize Cool.

     

    The problem for Apple is that fund managers, being far too overweighted toward this gadget company- especially those who really shouldn't have large holdings in a megacap tech stock to begin with - will dump it en masse if and when the price begins to fall, for the simple reason that they'll face very unpleasant questions from their own investors as to why they were so overweight one stock.

     

    .
    14 Feb 2013, 06:53 PM Reply Like
  • Atkins
    , contributor
    Comments (1037) | Send Message
     
    The "hipsters" are "shifting to the Samsung product...."

     

    ok, thibaud, if that's what you really think, but I would suggest that you go and talk to the "hipsters" to see what they really like. Hint: It's not Samsung.
    14 Feb 2013, 07:15 PM Reply Like
  • bgold1955
    , contributor
    Comments (1964) | Send Message
     
    Thi... You are greatly misinformed as you apparently did not even read last qtr reports. Stock went down on this qtr estimates. Do you really have that little impatience?
    14 Feb 2013, 07:28 PM Reply Like
  • thibaud
    , contributor
    Comments (165) | Send Message
     
    Not only is Apple slashing orders for the iPhone5, but the iPad is underperforming as well.Market share down from 56% in Q2 to 38% now. Unit sales falling. Revenues up only 1.8%.

     

    Ouch:
    http://read.bi/12GXMUN
    14 Feb 2013, 07:37 PM Reply Like
  • thibaud
    , contributor
    Comments (165) | Send Message
     
    Will Apple continue to throw off scads of cash? Of course. But they're not the coolest thing around anymore.

     

    Per IDC:
    Q4 2011 Smartphone unit sales: Apple 37m,Samsung 36.2m.
    Q4 2012 Smartphone unit sales: Samsung 63.7m, Apple 47.8m.

     

    Current market share: Samsung 29%, Apple 21.8%.
    Samsung's average selling price is rising. Apple's is not.

     

    Samsung is the latest cool thing in an industry whose consumers have, as one poster above colorfully put it in another context, the "attention span of a gnat."

     

    You won't make money by looking in the rear view mirror. Look around, plenty of great opportunities out there, including many with far better risk/return profiles than Apple.
    14 Feb 2013, 07:49 PM Reply Like
  • Dean Scarpinato
    , contributor
    Comments (372) | Send Message
     
    None of those gadget makers were software giants w/their own eco system who made miscellaneous billions thru iTunes and the like. AAPL makes more on the conservative returns from their cash pile than some of the companies you mention earn in revenue.
    14 Feb 2013, 08:18 PM Reply Like
  • Dean Scarpinato
    , contributor
    Comments (372) | Send Message
     
    Jay Yarrow is a jerk
    14 Feb 2013, 08:20 PM Reply Like
  • thibaud
    , contributor
    Comments (165) | Send Message
     
    Android's not an ecosystem to rival Apple's? Developers around the world are shifting to Android. You're behind the curve.
    14 Feb 2013, 09:03 PM Reply Like
  • civ-e
    , contributor
    Comments (325) | Send Message
     
    wasn't the 4S called that because S stood for the introduction of Siri in that phone. if so why would there be a 5S after the 5. also not sure why "the laws of physics" (which ones?) would apply in the business world.
    14 Feb 2013, 09:40 PM Reply Like
  • Silvy H
    , contributor
    Comments (120) | Send Message
     
    Atkins....If it isnt Samsung then please tell us who it is....because it certainly isn't Apple.....42% of the 47m plus phone Apple sold last quarter were iphone 4's and 4S's which are old versions, two years old in the iphone 4's case and I cant see hipsters wanting an old model phone can you?
    14 Feb 2013, 09:44 PM Reply Like
  • Silvy H
    , contributor
    Comments (120) | Send Message
     
    The stock also went down because of the last quarters flat income as well. Its all about the margins.
    14 Feb 2013, 09:52 PM Reply Like
  • thibaud
    , contributor
    Comments (165) | Send Message
     
    Samsung has blanketed San Francisco's hip quarters with ads touting their huge screen, and it's working. Evidence is piling up that in the bellwethers of cool on the other side of the Pacific, such as Hong Kong and Singapore, young trendsetters are experiencing "Apple fatigue" and have already turned toward the product from Korea, which is now seen as the latest in Cool. http://reut.rs/Yeev0V

     

    If you think this business of Cool is without much logic to it, welcome to the club. Apple is competing in the consumer fashion/pop culture world, where tastes can turn against the market leader in very short order. Apple is no longer the King of Cool.
    15 Feb 2013, 10:56 AM Reply Like
  • sheldond
    , contributor
    Comments (1048) | Send Message
     
    A lot of taking profit and locking in current tax rate. Check out some of the profits these funds had and locked in....... What will happen after a month or two....will these guys move their money back in

     

    A confluence of events has led to the current price. I bought tickets to the next swing of APPL but will I get off the train at the right stop. I do see the stock revisiting 700 but would not be surprised to see it go supernova..... I would be shocked to see 300 in the next three years but I suppose it could happen. Pretty safe buy in the 400's. I would definitely want to buy it before it breaks through 500.

     

    Long APPL
    14 Feb 2013, 07:17 PM Reply Like
  • zd2002
    , contributor
    Comments (151) | Send Message
     
    At its close of $466 today, how much would you miss by waiting for confirmation of $500 resistance break before entering? With no catalyst until March, when the board *may* announce some new plan with the cash, it's likely to range bound till then. Occasionally you get guys like Eihorn how drum up the neat and the stock jumps 10, 20 pts, but nothing major yet. I'll stay sideline until $500.
    14 Feb 2013, 08:43 PM Reply Like
  • scott trader
    , contributor
    Comments (4561) | Send Message
     
    By the time we hear about their sales they could be back in again...
    14 Feb 2013, 09:26 PM Reply Like
  • Longaapl1200
    , contributor
    Comments (20) | Send Message
     
    So some of the funds are leaving one of the best stocks to own in the last 50 years? Sounds real smart. I think I'll buy more now.
    14 Feb 2013, 07:33 PM Reply Like
  • tigersam
    , contributor
    Comments (1711) | Send Message
     
    Most of the speculators washed out of Apple. Apple will go only high from this point. Here is the another fun fact.

     

    1. The monopoly in search - Google
    2. Monopoly in OS - Microsoft
    3. Monopoly in Phones - Samsung
    4. Monopoly OS in Tablet - Google Android
    5. Who has the most revenue and low PE - Apple.

     

    If you are a long term investor. Buy. Even you do not have to worry about the government coming after you.
    14 Feb 2013, 07:52 PM Reply Like
  • BuildingBlocks
    , contributor
    Comments (47) | Send Message
     
    A difference of opinion in Apple's future.
    14 Feb 2013, 08:02 PM Reply Like
  • Hoopono
    , contributor
    Comments (219) | Send Message
     
    At the end of the day/quarter/year or decade, quality lasts and counts more than all of the short term thinking.
    14 Feb 2013, 08:22 PM Reply Like
  • whipsawKid
    , contributor
    Comments (32) | Send Message
     
    I thnk we need to define "quality" here.
    14 Feb 2013, 10:06 PM Reply Like
  • Kcobra
    , contributor
    Comments (4) | Send Message
     
    Too many people follow blindly to bad reporting. As for apple sellingroducts they are selling everything they make. So you are telling since they lost their coolness they are selling everything they can make and have more profit then Samsung.

     

    Wall Street guys are more clueless than we give them credit. Before seeing last qtr results they had started spreading false reporting about apple earnings.

     

    These guys take the stock up and same way bring it down. It's a game and media such as cnbc plays with them.

     

    In countries like India and china they are selling out iPhones and other products. However media reports incorrectly that they are having trouble. That's the first sign of clueless analyst and media that has made up their mind before seeing actual facts.

     

    Does iPhone need a bigger screen to compete with Samsung? Yes. But it's still more desirable than Samsung phones.

     

    Since when did we start trading stocks on technical charts and zero fundamentals. Technicals break down when media and false reporting breaks down stocks thus charts. This is the dumbest thing I have seen.

     

    Does anyone that does a business ever buy anything purely on technical and never look at valuation?

     

    This is the greatest stock manipulation I have seen? How else can You explain AMZN stock price after being in business for over 7 years still as growth company. It's margins are dismal to nothing. It's trading at close 4000 times earnings. So people wait another 7 years to come downt to PE of 400?

     

    There is no logic. Unfortunately if you have company like apple that generated $1 billion of profit per week isn't good enough. Although AMzn which genareates really nothing compared to apple is great investment.
    14 Feb 2013, 08:38 PM Reply Like
  • Silvy H
    , contributor
    Comments (120) | Send Message
     
    Except they are not selling everything they make as they have cancelled iphone 5 orders for this quarter.....if they are selling everything they make, why would they need to do that?
    14 Feb 2013, 09:49 PM Reply Like
  • XRTrader
    , contributor
    Comments (609) | Send Message
     
    Silvy - They have sold everything they have made. The one fact you can state about AAPL products in recent history is there has never been an excess of inventory.

     

    As for the "slashing" of iPhone 5 orders - the reports are all based on different initial "order numbers." Some reports say that AAPL orders were for the same 50 million phones (clearly un-necessary) as in the holiday quarter.

     

    Also, there is more subbing for older models (4 and 4S have been selling better then expected, and selling out) - there is rumor also that AAPL will move production capability to keep these older models in production longer, dropping costs, dropping ASPs and maintaining margins.

     

    So, has AAPL cut the total number of phones produced? I've looked very closely at the numbers (and Cook made a comment supporting this in his recent presentation) and it's just not possible to say with the data we have.

     

    Don't take everything you read at face value. Dig into it a little.
    15 Feb 2013, 12:22 AM Reply Like
  • jorjen
    , contributor
    Comments (34) | Send Message
     
    is there any way to know what green light bought on the 275k call options-------what strike and what expiration?
    14 Feb 2013, 09:11 PM Reply Like
  • XRTrader
    , contributor
    Comments (609) | Send Message
     
    I don't think so - certainly not with enough time to be relevant. However, a quick glance at the volume data suggests that he has spread out his purchases over several (many?) strikes and months. If they mean 275k contracts, he would own far too many to be safe in one strike/month if he ever wanted to exit with any speed.
    15 Feb 2013, 12:27 AM Reply Like
  • lsikora
    , contributor
    Comment (1) | Send Message
     
    Although I can't remember specifics, the other day I read where some funds have as much as 15% of thier capital in Apple stock. Any mutual fund with that much in one stock is a high risk mutual fund and I suspect they are now "unloading" because they are going bck to investment 101, i.e. diversify. Never buy any mutual fund that has such a significent portion of their capital in one stock. Most sucessful individual investors do not invest this way.
    14 Feb 2013, 09:42 PM Reply Like
  • thibaud
    , contributor
    Comments (165) | Send Message
     
    Bingo. AAPL's runup was fueled by unwise and herd-like portfolio allocations into one consumer gadget company. Given signs of weakness in that stock, the herd is furiously rebalancing so that their investors don't attack them for violating basic diversification principles.

     

    How do you think investors will react when they learn that 1) the money they thought was spread out across multiple investment classes (smallcap, largecap, growth, value etc) was in fact unusually concentrated in one stock, and 2) said stock is now falling?

     

    Will those investors listen to the Apple, Uber-Company of the Modern Era thesis any more? Or will they go back to proper diversification and dump the funds that violated this rule?
    15 Feb 2013, 10:10 AM Reply Like
  • winnie6052
    , contributor
    Comments (234) | Send Message
     
    Every stat of numbers on market share....is total BS...

     

    They are pure guesses .....Because no one reports sales number besides Apple.

     

    It is waste of time to say who has what market share. The numbers are all fabrication based on nothing.

     

    So I can report Samsung and Android have 80% of market. Based of whose numbers? Give me a spreadsheet and I will give you a bunch of numbers that mean zero.
    14 Feb 2013, 09:49 PM Reply Like
  • rrosey2
    , contributor
    Comments (688) | Send Message
     
    Well, this article explains much to me.

     

    We need to get some help from the SEC and tax laws.

     

    Hedge funds determine the price of securities. That makes a fool of an ordinary investor !

     

    Then, the tax laws give a great incentive to the hedge fund owners by exempting them.

     

    They manipulate the securities to go up or down artificially, not because of value, but to skim profits from the ups and downs.

     

    When the stock goes back to $700 the hedge funds will have made a fortune, and the little guy is left scratching his head..."what happened", he says.
    14 Feb 2013, 11:40 PM Reply Like
  • kennetj
    , contributor
    Comments (15) | Send Message
     
    Yep, that's how it works. Never go against the big guys. Be a leaf in the breeze and let them sweep you along with them: in when going up, out when going down. Don't attempt to guess the top or bottom, be happy with the middle. I'm long AAPL, will buy more in the 425 - 440 gap if given the chance. Have patience!
    15 Feb 2013, 04:20 AM Reply Like
  • moseslarsen
    , contributor
    Comments (379) | Send Message
     
    Bought under $460. Run AAPL run. Full disclosure: don't own one apple product, but when this postion runs to $600-650, I will reward myself with a new Droid! Cheers, Moses
    15 Feb 2013, 12:27 AM Reply Like
  • Michael O'Neill
    , contributor
    Comments (145) | Send Message
     
    Apple are doing just fine.

     

    700% increase in share price over 6 years, $137 cash in the bank, new cash generation of $1.25bn per week, 27% YoY sales growth, 28% and 42% percent sales growth of iPhones and iPads.

     

    Just because you say its so, don't make it so......

     

    The truth is the truth, and the facts always rule in the end. The hedge fund and short players have clearly had fun over the past 4 months with Apples share price.

     

    Apple are growing and moving forwards at an incredible rate. Growth in China is running close to 100% a year and they have hardly scratched the suface. The same is true in India when sales rose 400% in the last three months. They have less than 20 stores in both of these two countries that between them have four times the size of the middle-class that the US has. The US has 270 stores. Can you imagine the sales when Apple open another 250 store in these countries. Apple just open it's first store in Turkey. It is forecast to do sales over over $100m a year - from one store - doubling the normal Apple average.

     

    The share price will soon correct for it's current 'HALF PRICE SALE' 7x forward PE less cash holdings. Even at 15x market average PE would price Apple at $1,000 a share, but with the 20%+ growth it should be higher.

     

    With the introduction of any new product such as Apple iTV, iWatch a $1,000 a share would be the minimum level I would expect.

     

    The hedge fund players will soon look at Facebook with a PE of 270 and only 12% growth, or Amazon at a PE of 70 with 15% growth but with zero profits and huge debts. Even Google with a PE of 24 has slower growth than Apple and is more venerable with its narrow product lineup.
    15 Feb 2013, 12:33 AM Reply Like
  • tiger8896
    , contributor
    Comments (581) | Send Message
     
    I am long AAPL from lower levels but I am selling this rally, my wife and I walked into a Verizon store today intending to upgrade our iPhones and Verizon offered us the 5 for $149 bucks, lower prices are coming.

     

    Googles Play Store now has more apps than the Appstore and Android phones come in every shape and size, the iPhone 5 was not a standout looker compared to the Galaxy, Motorola or HTC phones.

     

    In hindsight I think the market correctly anticipated the heightened competition and lower margins that are coming. I also saw a Sony smartwatch at the store, novelty item at best hanging with the accessories. If Apple can make that concept a hit my hat's off to their creative people, I don't think an Apple watch will be their next big thing.
    15 Feb 2013, 01:53 AM Reply Like
  • Remyngton
    , contributor
    Comments (354) | Send Message
     
    clueless d.olts
    19 Feb 2013, 12:35 PM Reply Like
DJIA (DIA) S&P 500 (SPY)
ETF Tools
Find the right ETFs for your portfolio:
Seeking Alpha's new ETF Hub
ETF Investment Guide:
Table of Contents | One Page Summary
Read about different ETF Asset Classes:
ETF Selector

Next headline on your portfolio:

|