Apple Inc. (AAPL) saw strong performance over the past 12 months, outperforming the S&P 500 and rising by approximately 86.7% compared to the S&P’s gain of about 17.2%. Despite strong growth, hedge funds and institutions actively sold the stock in the third quarter, which explains the company’s recent slide in rating on the WhaleWisdom Heat Map to 40 from 4.
Apple is a multinational technology company that designs, manufactures, develops, and sells mobile communication and media devices, personal computers, computer software, portable music players, networking applications, and various online services. The company has moved beyond the initial negative impact of the coronavirus pandemic that many companies faced in the spring of 2020. Apple has continued to thrive as demand for its products and services strengthened.
Hedge Funds’ Enthusiasm Wanes
Hedge Funds were selling Apple’s stock in the third quarter of 2020. The aggregate 13F shares held by hedge funds decreased to approximately 1.3 billion from 1.4 billion, a decrease of about 9.2%. Overall, for hedge funds, 42 created new positions, 136 added to an existing holding, 30 closed out their position, and 331 reduced their stakes. Institutions decreased their aggregate holdings by about 5.0%, to 9.7 billion from 10.2 billion.
Apple has achieved record-level revenue and held the top sales position in the fourth quarter due to the iPhone 12’s successful launch. In the summer of 2020, analysts such as Wedbush Capital’s Daniel Ives noted the opportunity ahead for Apple as many consumers were coming eligible for upgrades to mobile phones; these upgrades are now coming to fruition. Katy Huberty of Morgan Stanley maintained an outperform rating on the stock and raised the price target to $164 from $152, noting customer loyalty as one major factor. Piper Sandler Co.’s analyst, Harsh Kumar, highlighted Apple’s impressive sales growth and increased Apple’s price target to $160 from $135.
Predictions for Continued Growth
Analysts have optimistic revenue estimates for the company over the next four years, expecting that earnings will rise year-over-year from 2020 through 2023. Revenue increases range from approximately 21.1% year over year in 2021 to 13.2% in 2024. These significant year-over-year estimates would bring earnings to $5.43 per share in 2024, up from $4.35 for 2021.
Hedge funds may have been selling, but analysts are very optimistic about the stock. Apple’s iPad sales continue to catch pandemic tailwinds, and there is strong demand for the iPhone 12. Recent growth and multi-year estimates are encouraging for investors in the long-term.