Proof That Apple Stock Is Very Under-Owned (AAPL, MSFT, XOM, GE, IAH, QQQQ, XLK, QLD, IYW)

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It is hard to argue against the thought that Apple Inc. (NASDAQ: AAPL) is one of the hottest growth stocks with great share performance and great brand loyalty.  Its shares closed out 2009 at $210.73, so we have seen nearly 50% gains so far in 2010 alone.  We often parse through annual reports (those boring 10-K filings) for bits of data, and there was a startling realization.  Apple is grossly under-owned by the investment community.  You may have heard this same expectation before in media reports, but we have quantified data showing that Apple has far fewer investors than you could imagine.  We even compared this the numbers of investors who own Microsoft Corporation, Exxon Mobil Corp. (NYSE: XOM), and General Electric Co. (NYSE: GE).  There is a similar realization for Google Inc. (NASDAQ: GOOG) in here.

There are obviously millions of investors who own Apple shares indirectly because of their holdings of mutual funds in retirement accounts and because of exchange traded funds holding Apple.  Apple has a high weighting in the Internet Architecture HOLDRs (NYSE: IAH), PowerShares QQQ (NASDAQ: QQQQ), Technology Select Sector SPDR (NYSE: XLK), ProShares Ultra QQQ (NYSE: QLD), and in the iShares Dow Jones US Technology (NYSE: IYW).

Outside of those Apple-dominated ETFs, we have also noted earlier this week about how Apple investors are often speculating in the options contracts rather than in the stock.  They can buy the right to own shares for a few dollars per share in equivalent that way rather than paying $300+ per share.

As of September 25, 2010, Apple had approximately 46,600 full-time equivalent employees and an additional 2,800 full-time equivalent temporary employees and contractors.  That is huge growth considering the unemployment rate and the economy.  As of September 26, 2009, Apple had approximately 34,300 full-time equivalent employees and an additional 2,500 full-time equivalent temporary employees and contractors.

Here was the shocking figure from the Annual Report, and the whole thesis for how under-owned Apple shares are by the public… As of October 15, 2010, there were 29,405 shareholders of record. After asking a portfolio manager of a foundation just how many holders of Apple there were as a guess, he said “Maybe 5 million.”  Does this mean that only 29,405 individuals and institutions own Apple?  Of course not, but it is a shockingly low number of shareholders compared to other giant companies.  We have not heard back from Apple with any comments or formal answers but a call into media relations and shareholder services has been made.

Fidelity and each of the ten top holders likely count only as one holder each despite the notion that the top 10 holders were close to 25% of the entire share ownership and despite each of those having potentially thousands of clients.  Again, the issue at stake is direct ownership counting individuals or institutions which made a decision to buy the individual stock on the stock market.  Out of those thousands of employees there have to be many options from that old 2003 stock option plan, and there would have to be many direct Apple stock owners of that pool.  Also worth note is that it is highly possible that many shares held “in street name” at each brokerage firm are just counted as one holder.  Without a comment from Apple, the data is harder to know but other companies list much more detail on the number of holders.

We went back through time to see if Apple had other years where there was a higher or lower number of “holders of record.”  Shockingly, the number remains almost static through time.  The data is as follows:

  • As of October 16, 2009, there were 30,573 shareholders of record.
  • As of October 24, 2008, there were 30,445 shareholders of record.
  • As of November 2, 2007, there were 30,336 shareholders of record.
  • As of December 13, 2006, there were 29,317 shareholders of record.
  • As of November 18, 2005, there were 28,333 shareholders of record.
  • As of November 19, 2004, there were 28,518 shareholders of record.
  • As of December 5, 2003, there were 29,015 shareholders of record.

This does not even hold a candle up to some other giant mega-cap stocks.  We took a look at Microsoft Corporation (NASDAQ: MSFT), Exxon Mobil Corp. (NYSE: XOM), and General Electric Co. (NYSE: GE).  Those are far wider owned as you will see.  The interesting thing is that Google Inc. (NASDAQ: GOOG) trades at nearly double the share price of Apple, and its holders of record is also shockingly low.