Banking & Finance

Hedge Funds Dump Apple Stock in Q1

When the going gets tough, the tough often leave town. In the first quarter of 2016, global hedge funds reduced their exposure to equities by 6.9%, more than four times the fourth-quarter 2015 drop. Apple Inc. (NASDAQ: AAPL) was the most heavily purchased stock in the prior quarter and the most heavily sold in the first quarter. The top 50 funds sold some $7.1 billion worth of Apple stock in the first quarter, compared with purchases of $2.2 billion in the fourth quarter of 2015.

The main contributor the dumping of Apple shares was the $4.8 billion sale by activist investor Carl Icahn, who dumped his entire stake in the company.

Overall, the 50 top hedge funds dumped $55 billion in U.S. equities in the first quarter, about half of which came from companies with market caps greater than $50 billion. Large cap stocks ($10 billion to $50 billion, according to FactSet) accounted for another $20 billion of the equity sell-off.

All 10 market sectors were sold off last quarter, led by the tech sector, where equity sales totaled $18.7 billion. Equity sales in the energy and consumer discretionary sectors rounded out the top three most-sold in the first quarter. Broadcom Ltd. (NASDAQ: AVGO) was the second most heavily sold tech sector stock, with $5.6 billion in sales in the quarter.

Facebook Inc. (NASDAQ: FB) was the most purchased stock in the tech sector during the first quarter, with hedge funds adding more than $3 billion to their holdings. EMC Corp. (NYSE: EMC) was the third most acquired tech sector stock as the top 50 hedge funds added $1.8 billion to their holdings.

First-quarter performance for holdings of the top 50 funds is −2.9%, compared to −1.1% for the S&P 500 stocks.

The most widely held stock among the top 50 funds is Microsoft Corp. (NASDAQ: MSFT), which appears in the portfolios of 25 of the funds.

The sell-off in tech stocks catapulted the consumer discretionary sector to the most widely held sector among the top 50 hedge funds. The sector now accounts for 18% of holdings, compared to 17.8% of weighted holdings for the tech sector.

The data were reported Thursday by FactSet.