In an equity environment where hedge funds are struggling to break even, Apple Inc. has played the role of savior, according to Goldman Sachs Group Inc.
A group of companies representing the most popular long positions for hedge funds is up just 0.2 percent in 2015, compared to a 2.3 percent gain for the Standard & Poor’s 500 Index, data compiled by Goldman Sachs show. A 19 percent year-to-date increase for Apple, which is owned by one in every five hedge funds and is a top-10 position for 12 percent of them, has provided a needed boost, the firm said.
Apple came into 2015 poised to have a major impact on money managers, comprising the highest percentage of hedge fund equity assets in more than two years, according to Goldman Sachs data. The technology titan constitutes 4 percent of an S&P 500 that’s hovering near an all-time high.
“Apple reigns undisputed as the most popular hedge fund stock,” a group of Goldman Sachs analysts including chief U.S. equity strategist David Kostin wrote in a Feb. 20 client note. The company is a “key driver of hedge fund performance, as well as U.S. equity earnings growth and returns,” they said.
Goldman Sachs maintains a basket containing the 50 stocks that appear most often among the top 10 holdings of fundamentally-driven hedge fund portfolios. For its most recent report, the firm analyzed 854 hedge funds with $2.1 trillion of gross equity positions at the start of 2015.
Apple is forecast to climb about 2 percent in the next 12 months, according to 44 analysts surveyed by Bloomberg. Goldman Sachs is more bullish, predicting a 9.7 percent rise to $145 per share. The stock added 2.1 percent to $132.17 at 1:20 p.m. in New York.
Hedge fund holdings of Apple remained resilient in the fourth quarter even as some large money managers pared exposure to equities, particularly for U.S. companies.
Greenlight Capital’s David Einhorn said he scaled back bets on stock gains during the fourth quarter after markets climbed and as a stronger dollar threatens to limit earnings of U.S. companies from operations overseas.
David Tepper’s Appaloosa Management had $2.74 billion less in U.S. stocks in the fourth quarter, a 40 percent drop from the previous quarter. Soros Fund Management, the family office of billionaire hedge fund manager George Soros, moved about $2 billion into companies in Asia and Europe, according to a person familiar with the strategy.
Some managers, such as Leon Cooperman, 71, remain bullish on the U.S., while predicting bigger gains in Europe and elsewhere.