Big surprise: Hedge funds fueled Apple stock’s fourth-quarter plunge

“Some of the biggest hedge funds that helped make Apple Inc a stock market darling lost faith and dumped their stakes in the fourth quarter, fueling the massive drop in the iPhone maker’s share price,” Aaron Pressman reports for Reuters.

“Noted stock pickers including Leon Cooperman and Thomas Steyer unloaded billions of dollars of Apple shares between September 30 and December 31, according to disclosure documents filed on Thursday,” Pressman reports. “Shares of Apple rose to an all-time high of $705.07 on September 21 but ended 2012 down more than 24 percent from that peak.”

Pressman reports, “Cooperman’s Omega Advisors fund dumped its entire stake of more than 266,000 shares during the fourth quarter, according to its required quarterly disclosure form filed with the Securities and Exchange Commission. Farallon Capital, the hedge fund founded by Steyer, sold 137,000 shares. Steyer, who once worked on the Goldman Sachs risk arbitrage desk, stepped down at the end of the year from the firm, which he founded in 1986. Jana Partners, an activist fund run by Barry Rosenstein, also unloaded its entire Apple stake of more than 143,000 shares.”

Read more in the full article here.

MacDailyNews Take: The fix was in.

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    1. Depends… It isn’t -that- much capitol (for a megaweight like Apple) so, in order to push a giant like apple you must push quickly and hope the momentum carries it further (in that direction)
      If they had bought a similar amount in a short period (as it appears they sold it in) they they could have caused appreciable movement. Though it is unlikely that it would be of similar magnitude (downward pushes always carry more weight then upward do)
      SO I guess the answer is, no it couldn’t have caused that big of upward push and it is unlikely that they affected it much at all (unless the bulk of buys were in a very short span)

      1. I think you are wrong about the buying and hoping. It does not have any more pressure or affect going down than it does going up. They bought and then they sold. Just as any investor do. And like many who held AAPL, I doubt that they sold all at the top when they should have. Hedge funds and mutual funds held AAPL for a long time. They were not Johnny-come-latelys. It was the individual investors who were piling on in August and September that made the price skyrocket. Just as individual investors did, hedge funds and mutual funds added more shares in this time period also. Thus the stock price went nearly straight up in September. At $700 investors started taking their profit as they should have. Remember, buy low and sell high. It’s a basic of all investing. Buy and hold forever is not a basic that you’ll read about anywhere. It’s not logical. Mutual funds and hedge funds were slower to get out of AAPL or the drop might have been sharper. Mutual funds had to get out because they needed to rebalance before years end and they also need to make a profit because that’s what they are in business to do for their clients. Hedge funds eventually had to get out as they saw the stock-price dropping because they too don’t buy just to lose money. And of course all those individual investors were trying to make a profit on their investment too. They didn’t buy shares of Apple just to sit around and brag. They invested to make a profit. Why else would you buy shares of any company? Buy and put them away and hope? That is the ultimate irresponsible act. Then there was the fiscal cliff and of course regular year end tax issues which prompted investors to sell not just Apple but any of their holdings in any stock if need be. Everyone here seems to believe that it was some coordinated Wall Street secret plan. Really? What, they all meet in some dark room behind a bar? C’mon. The stock ran up extremely high extremely fast. It was overbought on emotion. Happens all the time on. People buy in without thinking and the next thing they know they’re left holding the bag if they stay around too long. It’s not a plot. It’s not a conspiracy. It’s just people trying to make money quickly. I think we call that greed. No one was forced to buy Apple stock. No one was forced to hold that stock after it hit $705. Right? These are facts that simply can’t be denied. Or misconstrued successfully. Apple is not a cheap stock today. Most people can’t afford to buy several hundred shares. Apple is a great company with great products. Apple is oversold now just like it was overbought in September. Things will even out once Apple has some positive news that the public wants to hear. They will buy it again. But it’s only worth now what the public is willing to pay for it. It can’t be any more basic than that. There are better places to invest your dollars now. Apple will be more of a value investment going forward from this price today. Other than occasional spurts, don’t look for Apple to make you a lot of money in big chunks.

      1. True. The main problem is when a couple of hedge funds dump stock it usually causes a mad panic of sellers. If it were not for the hedge funds Apple’s volatility wouldn’t be so high. Individual investors wouldn’t be able to move in unison the way a hedge fund can. If I sold my shares it wouldn’t induce a panic like a hedge fund would. So I agree with you that I would like to buy low and sell high, hedge funds moving large blocks of shares can actually control stock movement and they can do it any time they want whether the company is doing well or not. Due to that wide volatility it makes it much harder for individual investors to know what the value of the stock really is. I don’t have a clue to Apple’s value except that it might be worth somewhere between $400 and $700 a share.

        1. Many individual investors only know how to buy and hold stock. The only time they think of selling is when the stock takes a dive and they get scared. That is where the money is for the smart fund managers. As the stock rises, individual investors get brave again and jump onboard pumping the price higher. The institutional investors start selling their stock to the public and continue selling while the price starts dropping.

          Word to the wise: go with the flow. Buy low and sell high. Volatility is your friend.

    1. No, I think you need to be put in prison for being stupid.

      Describe one thing that they did wrong.

      Now, the people who sold mortgage backed securities as relatively safe *while* their company was betting against them, that is or at least should be fraud.

  1. Last two paragraphs …

    “Large hedge funds are required to disclose their U.S. stock holdings within 45 days after the end of each quarter.

    But the filings may not give a complete picture of each fund’s moves, since only U.S.-listed shares and options must be revealed. Bonds, foreign shares and derivatives are not included, and short positions, or bets that a stock will fall in price, are not listed.”

    Like all of Wall Street, the Hedge Funds should be required to file complete information. The hedge funds listed should be investigated for collusion and/or intent to manipulate stock price.

  2. You wanna know how sentiment is changed to the negative?

    CRAP JOURNALISM. MacDailyNews Take: The fix was in.

    The three hedge funds mentioned sold about 540,000 shares total…over a 61 trading day period. Stated another way, about 9,000 shares per day.

    On average, 18,000,000 AAPL shares trade every day.

    Nine thousand shares is less than one minute average volume. 540,000 shares doesn’t rise to the level of ridiculously insignificant against the daily average.

    I wonder if MDN has, or knows how to use, a basic calculator.

    1. The price is set by what people accept and offer to pay. The number of shares per sale doesn’t matter. If you were watching the volume trace there was a spike in volume exactly every 15 minutes for about the first 2 to 3 hours each day. 90 sales of 100 shares each over 3 hours a day is enough to drive the price down if managed correctly.

  3. This is just the surface. Apple has almost a billion shares outstanding, and all of these trades amount to less than a million shares.

    There’s more to this story, and I suspect that there is a relationship between Apple being held down while other shares get propped up.

  4. Paul, whogastim and Dialtone, and those like them. The weak of mind blindly ready to accept, as gospel, what is offered without checking it out.

    A fool and his money are soon parted. I’ll bet these three scientists are broke.

    1. Not that I care what you think of me or my comments, gt, but my comment hase to do with what should be SEC requirements for full disclosure and investigation of possible illegal activity by the responsible agency. One of the foundations of a “free market” is supposed to be access to relevant information. If Hedge funds and other financial companies are not required to disclose fully, then individual investors cannot make informed decisions, if they care to do the research. Thus each trade becomes more of a gamble. I understood this when I purchased my Apple stock at an average of $90, but did not choose to sell it, yet. I don’t need that money and for now, I am gambling that the fundamental financial strength of Apple will yield higher long term results than other investments of similar risk/return.

  5. There was, I suspect, a secret oath, sworn in blood, that they would get those Apple dudes for what they did to Mario down by the docks. Dirty deeds leave long memories.

    I sat at my desk, half a bottle of whiskey down my throat, while the other ran down my shirt. The stubs of far too many cigarettes littered the ashtray, spilling to the desk. Suddenly, It came to me. Apple shares tanked, because the perceived value made them worth less toe the people who actually had a financial stake in them. And, just like a dame who leaves you at the dock, to make off with some foreign sailor, I decided that the best thing to do was to gargle down some cold coffee and get on with my day.

    1. Yes, this is true. Then she and her girlfriends shorted the crap out of AAPL and Apple the company just let it happen while sitting on what is now $137 billion in the bank.

      This sad story needs a happy turn around like Apple is picking up AAPL shares at two thirds of the cost then released the next big thing and ran the price back over the $700 prior price!

  6. Selling a stock like Apple could trigger massive capital gains tax. Individuals need to do tax planning and having volatile annual earnings could result in significant tax payments that eat up funds that otherwise could be put back in the market. Buy and hold avoids the panic and lets the investor control the rate at which stock gains are realized and tax liabilities realized as well. Hedge funds are engaging in wash trading, which is what Joe Kennedy used to do before the SEC was set up to stop him. Fat lot of good that did.

  7. Parasites in action. They fed the stock, ripped open its veins and bled it to feed their lust for financial nourishment. Dark souls have nothing better to do with their lives than destroy it while pulling a reverse-golden-rule job by also destroying others along the way. The lost don’t like being lonely or bored.

    This of course has nothing-at-all to do with Apple the actual company. Apple remains the great Apple. My fervent wish is that the illness of the parasites never infects Apple’s business culture. May they ever remain the best, most sane company on the planet. 😀 Oh and again: No fracking wonder Apple keeps a horde of cash when sick-ass vampires are flying about in the warped world of biznizz bozocity.

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