This Hedge Fund Made Apple Its No. 1 Position Last Quarter

Includes: AAPL, CAT, PFE, PG, SLB
by: Insider Monkey

By Alex Oleinic

In the latest round of first-quarter 13F filings, Stevens Capital Management is a fund typically flies under the radar, but we'll place it in focus for the simple fact that it remains committed to Cupertino. Let's discuss the five largest positions in Stevens Capital's equity portfolio, which include Apple (NASDAQ:AAPL), Procter & Gamble (NYSE:PG), and Caterpillar (NYSE:CAT). Interestingly, three of the top five picks in this filing are new positions for the fund (see the original 13F filing).

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The top dog

In the equity portfolio of Stevens Capital Management, Apple occupies the leading position in terms of overall monetary value. Stevens Capital reported holding 136,929 shares of Apple at the end of the first quarter, surging from the 436-share position reported at the end of last year. The value of the stake also jumped to $60.6 million from just under $232,000. According to our database, Apple has been one of the most loved companies in the hedge fund world, so to speak, as more than 130 of the hedge funds we track were long heading into 2013. That's second to only American International Group (NYSE:AIG), as we discussed earlier this year. The year-to-date return of Apple's stock is about -14%, and it is trading at a forward P/E of 10.4x.

The best of the rest

Next on the list is Procter & Gamble, whereas the fund disclosed holding 621,519 shares in Q1, up from 608,585 shares at the end of Q4 2012. The current value of the stake is about $47.9 million, versus $41.3 million posted the previous quarter. Procter & Gamble's shares are trading at a forward P/E below 18, about a 38% discount to the industry average. In April, Procter & Gamble said that its Board of Directors raised its quarterly dividend to $0.6015, from the previous mark of $0.562 per share. Out of the funds we track, over 50 hedge funds were invested in Procter & Gamble at the end of last year, and aside from Stevens Capital Management, Bill Ackman and Warren Buffett were a couple of the names invested (see Buffett and Berkshire's favorite stock picks).

In third, Caterpillar is a new position in the equity portfolio of Stevens Capital. In the most recent 13F, the fund disclosed holding 454,116 shares, worth almost $39.5 million. Our database shows that at the end of last quarter more than 30 hedge funds held shares of Caterpillar, which is trading at a forward P/E of about 11 and a year-to-date return of almost -0.1%. Caterpillar posted a decline in its earnings per share to $1.31 for the first three months of 2013, against $2.37 in the year-ago quarter. Over the whole 2013, Caterpillar expects earnings of $7.00 per share, with the previous outlook estimating profits in the range of $7.00-9.00 per share.

The final two

Another new position is Schlumberger (NYSE:SLB); the fund reported a holding of 520,525 shares. The value of the stake is worth almost $39 million, sitting at fourth in the fund's equity portfolio. Schlumberger is a company engaged in technology and information solutions for oil and gas exploration/production, and its stock has a year-to-date return of over 11%. For the first quarter of 2013, Schlumberger, which can be found in the equity portfolios of 55 of the hedge funds in our database, posted revenue worth $10.67 billion, up from $9.92 billion in the first three months of 2012. The stock is trading at a forward P/E of 13.0x.

The last of Stevens' five largest holdings in terms of value is Pfizer (NYSE:PFE), which is also a new position. The fund disclosed in its most recent 13F filing with the SEC, a stake of 1,243,218 shares at a value of $35.9 million. For the first quarter of 2013, Pfizer posted an adjusted diluted EPS of $0.54, down by an annual 5%. For the whole year, Pfizer forecasts adjusted diluted EPS of $2.14-2.24, the company said in a statement, with previous estimations between $2.20 and $2.30. Our database shows that there are more than 70 hedge funds bullish on Pfizer, so it's well loved by many of Stevens' peers. The stock has a year-to-date return of above 15% as well, so the fund's bet has been rewarded in 2013 thus far.


The aforementioned holdings reveal the conviction held by the managers of Stevens Capital Management. The increases of its Apple and Procter & Gamble positions, as well as the last three holdings, which represent new stakes, show that Stevens' aim is to achieve a diversified equity portfolio that will comprise large-cap companies from various industries. This is also emphasized by the fact that there are 940 positions in the latest 13F filing, compared with 930 in the previous 13F.

Disclosure: I am long AAPL.

Business relationship disclosure: This article is written by Insider Monkey's writer, Alex Oleinic, and edited by Jake Mann. They don't have any business relationships with any of the companies mentioned in this article and they didn't receive compensation (other than from Insider Monkey and Seeking Alpha) to write this article.