Hedge Funds Dump Apple Stock in Q1
In the first quarter of 2016, global hedge funds reduced their exposure to equities by more than four times the fourth-quarter 2015 decline.
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.
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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.
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Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.
He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.
