Hedge Funds Are Betting On Apple Inc. (AAPL) This Year


Stifel analyst Aaron Rakers might still be playing it safe on Apple Inc. (NASDAQ:AAPL), but he recognizes a bullish change in the air when it comes to the institutional holders of the stock; in fact, the base is more confident than the analyst has seen in the past seven years.

Nonetheless, the analyst remains sidelined but with a watchful eye on buzzing hedge fund sentiment, reiterating a Hold rating on shares of AAPL with a $130 price target, which represents a just under 6% downside from where the stock is currently trading.

Rakers notes, “Of all the institutions holding Apple in their portfolio, we would classify 19% of these as overweight Apple exiting 2016, or rather Apple as a percentage of their total holdings was greater than Apple’s market share accounting for ~3.2% of the S&P 500 exiting 2016. This compares to 15% in the prior and year-ago period and represents the highest level we have seen since early 2010. Similarly, our analysis of Apple’s top 100 holders would find 24% as overweight Apple exiting 2016 and representing the highest level we have seen since late-2014. We would highlight the decline in portfolios overweight Apple exiting 2Q16 and subsequent increases in 3Q16 and 4Q16 as driving a positive portfolio return contribution from holding Apple in 2016 […] The top-10 institutions (by AUM) have cumulatively increased their ownership sequentially on a net basis by 50 million shares in both 3Q16 and 4Q16 – representing the largest net increase we have seen dating back to 2010.”

Considering the top 100 institutes have boosted their ownership of Apple shares up from 50% this time last year, the analyst commends a record-high number that has not been in play in three years.

As Apple nears closer and closer to the launch of the iPhone X, the analyst contends shares could keep rising.

As usual, we like to include the analyst’s track record when reporting on new analyst notes to give a perspective on the effect it has on stock performance. According to TipRanks, four-star analyst Aaron Rakers is ranked #527 out of 4,503 analysts. Rakers has a 58% success rate and yields 11.8% in his annual returns. When recommending AAPL, Raker realizes 10.7% in average profits on the stock.

TipRanks analytics demonstrate AAPL as a Strong Buy. Out of 36 analysts polled by TipRanks in the last 3 months, 29 are bullish on Apple stock and 7 remain sidelined. With a return potential of nearly 6%, the stock’s consensus target price stands at $144.83.