Prominent Hedge Funds Flocked to Apple in Fourth Quarter

MoneyAlthough Apple(NASDAQ:AAPL) reported record revenue for its fiscal first quarter, the earnings results disappointed Wall Street and caused the company’s share price to decline by over 8 percent the day after the results were released. However, despite Wall Street’s initial negative reaction to the company’s December quarter results, Apple attracted major investments from top U.S. hedge funds during the fourth quarter, reports Reuters via CNBC.

Third Point, the hedge fund run by activist investor Daniel Loeb, purchased 100,000 Apple shares during the fourth quarter, according to regulatory filings seen by Reuters. Blue Ridge, the hedge fund founded by Tiger Management veteran John Griffin, added 320,000 Apple shares to its portfolio of investments.

Carl Icahn, chairman of Icahn Enterprises, is perhaps the highest profile Apple investor. The day after Apple’s quarterly earnings results were announced, the billionaire investor tweeted that he had purchased an additional $500 million more of Apple shares, boosting his estimated total investment in the California-based company to more than $4 billion.

Icahn had long been pushing the iPhone maker to return more cash to shareholders by expanding its share repurchase program by another $50 billion. However, the activist investor dropped his proposal soon after CEO Tim Cook revealed in an interview with the Wall Street Journal that the company had repurchased $14 billion of its own shares after its fiscal first quarter earnings announcement. Although Cook was “surprised” by the sudden decline in Apple’s share price, he used the opportunity to accelerate the company’s ongoing stock buyback plan.

In an open letter to Apple shareholders, Icahn noted that Apple’s “’opportunistic’ and ‘aggressive’” share repurchases have brought the company close to his “requested repurchase target,” effectively making his proposal moot. He also cited the recent recommendation against his proposal made by proxy advisory firm Institutional Shareholder Services Inc., or ISS.

Icahn has been a vocal cheerleader for Apple’s earnings potential and recently noted that Apple would be trading at $1,245 per share if it was being traded at the same multiple of operating profit that Google (NASDAQ:GOOG) is traded at. “[I]n light of Tim Cook’s confirmed plan to launch new products in new categories this year (in addition to an exciting product roadmap with respect to new products in existing categories), we are extremely excited about Apple’s future,” wrote Icahn in the letter to shareholders.

On the other hand, at least one top hedge fund reduced its stake in Apple during the fourth quarter. Appaloosa Management, the hedge fund founded by David Tepper, cut its stake in the California-based tech company by 12 percent to 215,320 shares, reports Reuters.

Here’s how Apple traded on Friday.


Follow Nathanael on Twitter (@ArnoldEtan_WSCS)

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