Apple stock (AAPL) - Get Report has not seen much love from “celebrity investors” and the “smart money” lately. As shares of the Cupertino company inch closer to all-time highs after four months (and counting) in a drawdown, several high-profile asset managers have been trimming and even ditching their positions.
Buffett trims, Gates and Wood unload
A few days ago, the Apple Maven reported on Berkshire Hathaway’s sale of AAPL in the first quarter of 2021. Warren Buffett’s conglomerate owned as many as 1 billion Apple shares as of the end of second quarter 2020, but the position has been trimmed to less than 900 million today.
A few days ago, Cathie Wood’s ARK Invest completely unwound its position in Apple stock, after a sequence of recent portfolio trims. The famed asset management firm used to hold AAPL in its Fintech Innovation fund (ARKF), but was no longer an investor in Apple’s equity as of May 25.
Also, Melinda and Bill Gates’ headline-grabbing divorce was preceded by the Bill & Melinda Gates Foundation having sold its one million Apple shares in the first quarter of 2021. It is unclear, to the best of my knowledge, what led the large charity organization to ditch Apple from its portfolio.
Lastly, TipRanks reports that the 200-plus hedge funds covered by the online platform sold a net 376,000 Apple shares in the March quarter. A decline in the size of the AAPL positions by hedge funds has been observed since late 2019, from about 1 billion shares then to roughly 900 million today.
Should individual investors sell too?
The Bill & Melinda Gates Foundation trade is a bit harder to dissect, since the reason behind the sale of Apple stock in this case is unknown. But otherwise, it is easy to understand why each of the other high-profile investors have disposed of some of their Apple shares – and why individual investors should not panic.
Berkshire Hathaway has been consistent in the trimming of its Apple position. First, the Oracle of Omaha himself has explained that his conglomerate can own as much or even more of Apple’s equity despite the occasional allocation haircut due to Apple’s share buybacks. Also, AAPL has been up 60% in the past year, and some portfolio rebalancing is not unreasonable.
Cathie Wood has not been an Apple stock bull in a while. She has made it clear that, to ARK Invest, holding AAPL is akin to parking money on the sidelines. Ditching the stock recently was a necessary move for the fund to reallocate money to high-growth, high-valuation stocks following the recent dip.
Lastly, the decrease in hedge fund ownership of Apple can probably be explained by the rotation out of a position that has produced large gains in the past 12-24 months. For instance, the 900 million shares of Apple in hedge fund portfolios today are worth much more than the 1 billion units held in mid-2019.
The Apple Maven has recently offered clues that individual investors are more likely to benefit from owning, and not trading Apple stock. Generally speaking, and without considering individual risk profiles and financial goals, I still believe this to be the best course of action.
What does it mean to you when “the big wigs” of investment management sell their Apple shares? Is it time to sell, buy, or do nothing? Leave your opinion below.
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(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting The Apple Maven)