Moore Capital Management LP added shares of Johnson & Johnson (JNJ) and sold Apple Inc. (AAPL) in the second quarter, reflecting a switch among investment funds to stocks that are least-tied to economic growth.
J&J, the biggest health-care products company, had the largest increase in ownership among money managers as holdings grew by $21 billion through purchases of 271.7 million shares and price appreciation, according to regulatory filings from firms with at least $100 million in U.S. equities. Apple had the seventh-biggest decrease as managers reduced their stake by $9.32 billion, the data show.
Investors added the most in health-care stocks and companies that make household goods during the weakest quarter for U.S. corporate profits since 2009. They cut technology and energy shares as the industries in the S&P 500 dropped more than 6.5 percent between March and June.
“The trade was not so much of buy health-care and staples, but to rotate away from companies most dependent on economic growth,” said Alan Gayle, a senior strategist at RidgeWorth Capital Management in Richmond, Virginia, which oversees about $47 billion. He spoke in a telephone interview. “Concern about a global slowdown and a worsening of Europe’s debt crisis caused a lot of investors to rethink their cyclical exposure.”
Investment firms boosted the proportion of their equity holdings in health-care companies and consumer staples stocks by 0.7 percentage points and 0.5 percentage points, respectively, data compiled by Bloomberg show. The industries in the S&P 500 have price-earnings ratios of 13.7 and 17.4, the highest since 2008, according to data compiled by Bloomberg.
Managers cut technology weightings by 0.7 percentage point and energy stocks by 0.5 percentage point, the data show. Positions in financial shares dropped 0.2 percentage point.
The S&P 500 lost 3.3 percent in the three months ended June 30, snapping a rally in the previous two quarters, amid concern about global economic growth. During the second quarter, the U.S. unemployment rate unexpectedly increased, China’s economy slowed and concern about Greece leaving the euro intensified.
So-called defensive companies, which generate profits that are less sensitive to changes in the economy, were the only industries to gain during the quarter among 10 main groups in the S&P 500. Phone companies, utilities, makers of household goods and health-care providers added at least 1.1 percent. Banks and brokers, technology companies and commodity producers had the biggest losses, falling more than 4.7 percent.
Birinyi Associates Inc., Renaissance Technologies LLC and AQR Capital Management LLC bought J&J shares as the New Brunswick, New Jersey-based company rose 2.4 percent. The stock jumped 2.2 percent on June 13 after executives said its $21.3 billion purchase of Synthes Inc. will boost 2012 earnings.
J&J slipped 0.2 percent to $68.21 as of 11:59 a.m. in New York.
Greenlight Capital Inc., the hedge fund run by David Einhorn, bought more than 6 million shares in Cigna Corp. (CI) and Coventry Health Care Inc. (CVH) while selling its holdings in Dell Inc. Schafer Cullen Capital Management Inc. added 4.12 million in Merck & Co. during the quarter.
Cigna, based in Bloomfield, Connecticut, and Coventry Health in Bethesda, Maryland, have unlevered balance sheets and trade at single-digit price-earnings ratios, making them cheap, Greenlight said in an investor letter dated July 23, a copy of which was obtained by Bloomberg News.
Jonathan Gasthalter, a spokesman for Greenlight and Renaissance, declined to comment on the trading and James Cullen, president of Schafer Cullen, didn’t respond to e-mail messages seeking comment. Laszlo Birinyi, the president of Birinyi Associates, didn’t reply to a voice message and e-mail sent yesterday.
Technology shares, which make up about 20 percent of the S&P 500, had the largest decrease in money managers’ ownership in the second quarter. Apple, the world’s most valuable company, had the third-biggest drop in ownership within the industry behind Qualcomm Inc. (QCOM) and Cisco Systems Inc. (CSCO)
AQR, in Greenwich, Connecticut, sold 25,739 Apple shares. D.E. Shaw & Co., the New York-based hedge fund that uses computer models to pick trades, cut its position in the maker of iPads by 190,205 shares.
Margaret Wyrwas, a spokeswoman for AQR, said the firm doesn’t comment on individual stocks. An e-mail to D.E. Shaw’s media relations department was not returned.
Moore Capital Management bought about 300,000 J&J shares and sold approximately 52,000 shares of Apple. The iPhone maker dropped 2.6 percent during the second quarter. Shares of Cupertino, California-based Apple are up 56 percent in 2012, compared with a 12 percent rally in the S&P 500.
The hedge fund that had boosted its JPMorgan Chase & Co. (JPM) investment earlier this year, joined other firms in selling the bank’s shares following a multibillion-dollar trading loss. The $15 billion New York-based firm run by Louis Moore Bacon, sold its full JPMorgan holding of about 6.47 million shares in the second quarter. TPG-Axon Management LP, the $4 billion fund run by Dinakar Singh, sold its stake of 3.13 million shares.
Shawn Pattison, a spokesman for Moore Capital, and Dan Gagnier, a spokesman for TPG-Axon, declined to comment.
JPMorgan stakes held by hedge funds, mutual funds and other asset managers with at least $100 million in U.S listed equities shrank by $29.7 billion to $92.5 billion in the second quarter, the biggest position decrease among all U.S. equities in the quarter, according to data compiled by Bloomberg. Firms sold a net 71.5 million shares in the period after the New York-based bank disclosed a trading loss that has grown to at least $5.8 billion.
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