Apple’s 21% surge stings the 295 funds that bailed since June

“Apple Inc.’s third-quarter rally is unwelcome news to the unusually large swath of investors who have been giving up on the stock,” Lu Wang reports for Bloomberg.

“Shares of the iPhone maker have jumped 21 percent this quarter, trouncing the S&P 500 Index,” Wang reports. “At the same time, the number of its institutional owners has fallen 1.3 percent to 3,847 since June as 295 firms sold out of their positions entirely, a 28 percent increase from three months ago, according to regulatory filings compiled by Bloomberg. It’s another blow for active managers who are trailing the market by the most in more than a decade based on full-year results. Apple’s share gain was about nine times the S&P 500 as Chief Executive Officer Tim Cook’s product plans eased concern over the company’s future growth.”

“Growing pessimism turned out to be misplaced as the stock staged the biggest weekly rally in five years. Even as the S&P 500 suffered its worst retreat since the U.K’s vote to exit the European Union over the past week, Apple shares stood as one of the biggest winners,” Wang reports. “With gains exceeding 2 percent every day since last Friday, the stock is up 12 percent, beating all but one companies in the S&P 500. T-Mobile US Inc. and Sprint Corp. said they’d received almost four times as many orders for the iPhone 7 as previous models, fueling speculation that the new product is off to a faster start than usual.”

Read more in the full article here.

MacDailyNews Take:

Don’t trade AAPL, own it. – Jim Cramer

iPhone 7/Plus optimism blasts Apple stock to 2016 high; market value edges back above $600 billion – September 14, 2016
Here’s why Warren Buffett added to his Apple position, stock going to $150 – August 17, 2016


    1. It was especially funny to me, because I had planned on posting “haha” after I read the email.

      Individual investors – pay special attention to the statement “It’s another blow for active managers who are trailing the market by the most in more than a decade based on full-year results.” Paying for “expert” advice via managed funds does not pay off. The evidence shows that any potential benefits of active, selective weighting of market positions is overwhelmed by the higher management and 12b-1 fees compared with simple, low-cost index funds. If these guys can’t reliably beat the averages, then they don’t deserve the income.

  1. Idiots. When my dad FINALLY took my advice and bought Apple shares…he bought a lot at around $60 something per share (was years ago). His brain dead financial guy convinced him to sell ALL OF THEM when it was in the 70’s. We all know what happened next. We don’t talk about that at dinner anymore since it depresses him.

  2. It now seems that well over 50% of the articles on MDN have to do with Apple’s financial and legal issues. Another significant fraction is about Apple’s competitors.

    Once upon a time this site’s articles were mostly about Apple’s products, how to use them, what was coming, and how best people can use those Apple products.

    I miss those days.

    Yes. I’m an Apple investor. I’ve been “long” on Apple since the dark days. But that does not mean I want to read about what that’s doing every day.

    1. I agree in general, Shadowself. In particular, I would love to see the end of the political clickbait articles on MDN.

      But we do still talk about Apple products on MDN from time to time. In fact, there are far more Apple products to discuss than there were fifteen years ago. So we tend to discuss them at a higher “specifications” level rather than diving down into the naughty bits.

      Perhaps we have just become a bit jaded. I remember the anticipation of each major Apple event. A big part of it was the suspense and showmanship of Steve Jobs. But I also believe that it is getting more difficult to “wow” people with the magical. After you pull the rabbit out of the hat a few times (iMac, OS X, iPod, iTunes, PPC to Intel CPU transition, iPhone, iPad, Apple Watch), each new event is greeted with less public enthusiasm.

      Keep in mind that people were glued to their TV sets worldwide for the Apollo 11 moon landing, but became much more indifferent by the Apollo 13 mission (until the drama of the oxygen tank explosion ensued). Awe is incredibly difficult to sustain in a world of “What have you done for me lately?”

      1. Sure but that doesn’t mean that the law of diminishing returns has set in for good!

        Yes we are all wired to leap at a surprise and to crave delight. But the wiring frays if you excite those circuits every day, and it seems to take more and more voltage to get a rise out of us.

        But if we have learnt anything at all about the future, it’s that it contains an inexhaustible supply of surprises. Our primitive predictions may remove some of them, but there is always one more thing, that we didn’t see coming…

  3. That’s what happens when you listen to analysts. A fool and his money are soon parted.

    Shadowself, interesting observation. I quickly counted 42 headlines at the time of posting, 31 of those I’d consider direct Apple topics, 4 on a competitor’s exploding phones, 5 on the stock and a couple of miscellaneous.

    Looks more like 75% of the articles on MDN had directly to do with Apple from my count.

  4. The main problem with the stock market the last 10 years is the rise of the algorithm based portfolio management that only rewards momentum trading. The result is that you can invest in a company based on fundamentals, but you will often lose money as the momentum trades build upon themselves for no reason other than the price is moving one way or another, regardless of what is actually happening in the actual business.

    This is not the original purpose of public capital markets, which are supposed to efficiently allocate societal capital on the basis of future profitability of businesses that results from providing societal needs and wants. Yes, there have always been short term traders that essentially gamble on stock price moves (separate from actual business performance), but that part should be a minority if the stock market was actually serving its intended purpose.

    Based on the returns of actively managed portfolios in the US (mutual funds or hedge funds) the last two years, I think it is clear that even the “professionals” can’t come up with a workable investing strategy based on rational economic analysis of a business’s management and performance. The only ones making money are the momentum flash traders that profit strictly off of their computer’s trading speed advantage to profit off of momentum.

    1. You absolutely nailed it! Priority access and speed are the keys to profiting in modern markets. Momentum and emotion are larger drivers than fundamentals. The system is sick and dying (unless you are one of the privileged few with superior access).

      Casino owners are not gamblers – they have the math on their side. The gamblers, in the aggregate, lose. A similar situation exists for Wall Street with the individual investors left holding the bag. No-load, low cost index funds are just about your only defense again the brokerage houses.

  5. All those investors who bailed on Apple have still seen nice growth from buying Amazon, Alphabet, Facebook, Tesla and even Microsoft. It’s not as though they didn’t make any money. Amazon is said to be going to $1000 a share and Facebook will likely reach $150 pretty soon. Apple is still the only tech company where doom and gloom is always a single quarter away.

    I’ve owned Apple stock nearly a dozen years so I have no reason to dump the stock because of a year or so of weak share gains. I’ve never expected to get rich from owning stock like most of those big investors do. I just got lucky from owning Apple as it returned more than I ever expected and with dividends to boot. It’s nice Apple stock has gone up a bit over the last week or so but that doesn’t erase those losses from when it was $130 a share. I can easily understand why those big investors dumped Apple. No investors wants to own some stock that simply stagnates endlessly, especially when there is no reason for that to be. Apple has enough cash to do anything it needs to in order to boost revenue, instead of simply coasting along.

    So those Apple stock dumpers missed an Apple rally but who knows how long this Apple rally will last. They’re probably better off sticking with those other companies where growth is said to be unlimited. Too many people seem to hope Apple fails so it won’t be easy for Apple to make future gains. Apple, unlike Amazon is always being shorted by traders. Apple isn’t showing any signs of growing their business as much as those other companies are doing. Apple seems content to just coast along while those other companies are being very aggressive in boosting their revenue by any means possible.

    Greed is always going to burn some fund managers but sometimes luck plays a big part. Apple has a long way to go to get back to $130 and I’m not sure that’s even possible. I can hope but I have almost no expectations at all. Tim Cook doesn’t seem to be the type of CEO who gives confidence to shareholders.

    1. Since the early 1990s Apple has gone from a niche manufacturer to the largest publicly traded company in the world. How is that NOT growth?

      I paid a (multiple) split adjusted $0.78 per share for my Apple stock and now it’s selling at about $115. That sure seems like growth to me!

      I’ve made WAY more on each invested dollar in Apple stock than in ANY of my multiple mutual funds.

      To hell with the analysts, buy and hold Apple to make money long term.

  6. To me one of the most underreported parts of this is that all this time that institutional investors have been dumping AAPL stock, the company has steadily been buying back and retiring a huge number of shares.

    By the end of this year Apple should have bought back 20% of the entire Float from 2013, with no signs of stopping. We haven’t really seen the effects yet, but I have to think that at some point, there will be a time when there’s no longer a lot of shares available which investors are easily spooked out of dropping easily.

    Apple has been systematically carving out the weakness in the market while these professional investors sit on the sidelines, not realizing their entry point has likely already passed.

  7. There are still 5.4 BILLION shares outstanding. Even at 20%, the actual traded liquidity of shares in the market really has not changed. It is only when there is a reduction in liquidity that the price gets driven up by a share buyback. The only thing that the buyback does in the meantime is boost EPS, which the traders don’t seem to care about or be willing to pay for anyway based on Apple’s PE of 13.35 vs. AMZN 193.22 as of today.

    1. That’s the million $ question. If Apple continues to buy back a million shares a day, at what point does it impact the traded liquidity and thus share price?

      It may not happen in the next year, or even next few years, but as long as Apple continues to make profits and stays committed to this program, at some point it will make an impact.

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.