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Groupthink: $18 Billion In Losses For The Top Apple/Cisco Holders In Past Two Days

Tyler Durden's picture


There is a reason why groupthink is often the most dangerous concept in the financial industry. When it works: it makes everybody richer. When it fails, it results in the premature end of many asset managers. Nowhere is this better seen today than in the top holders of Apple stock, which according to CapIQ, is held by 1,933 institutions that have at least one share holding in the name, and 402, which have at least 100,000 shares. Cross-referencing the top 100 holders of AAPL stock with the top 100 holders of a recent tech casualty, Cisco, shows that the of the top 100 Apple holders (one of them being Steve Jobs), 93 are also present in Cisco. And a result of the past two-days' drubbing in these two names, these massively cross-correlated top holders in the two stocks have seen over $18 billion worth of P&L losses in the past two days alone. Now many will respond that these firms have also experienced massive profits on the upside, which of course would be correct. However, what many will also conveniently ignore, is that these very firms will all too often leverage unrealized profits and use these as margin to purchase additional stocks, in essence re-creating a new cost basis with every single remargining of the stock. Therefore, should there be a sell of in Cisco, or heaven forbid, Apple, it will pull the rug from the entire market. It also explains why mysterious buying will often materialize: the last thing the market can afford is a massive domino-style sell off due to the plunge in one single name. So far today, Apple dodged the bullet. Cisco still has not. At some point these mutual and hedge funds, however, will receive margin calls to fund over $18 billion in cash collateral, especially since mutual free fund cash is currently at all time lows just over 3%. When that happens, not even Brian Sack will save the market.

Which is why all Apple longs are now terrified to find out just how many other institutional holders of Apple will have pulled a Heebner and bailed: if the news of one fund dumping was enough to send the stock down over 3%, wait and see what happens when 2, 5, 10, 50 funds all decide it is time to pull the plug...

Below we show the losses in AAPL and CISCO for the top 100 institutional holders of AAPL, accumulated over the past two days.


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Fri, 11/12/2010 - 14:54 | 722839 Id fight Gandhi
Id fight Gandhi's picture

Where's the money going today?

Stocks down, dollar flat, metals down, bonds down... WTF?

Pomo probably helping keeping market up too.

Fri, 11/12/2010 - 14:56 | 722842 Aristarchan
Aristarchan's picture

Maybe back into fiat currencies?

Fri, 11/12/2010 - 17:00 | 723285 Minion
Minion's picture

Yes, exactly.  Dollar, Euro, Yen, and Pound are green while most risk assets are on fire.  Higher margin rules for commodity speculators seemed to trigger the pullback. 

It's all about capital flows.  :) 

Fri, 11/12/2010 - 14:59 | 722846 Spalding_Smailes
Spalding_Smailes's picture

The abyss ? or ...


The Walt Disney Company
Fri, 11/12/2010 - 15:01 | 722864 -Michelle-
-Michelle-'s picture

Sealy, until the local coin dealers can restock.

Fri, 11/12/2010 - 15:27 | 722959 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1

Fri, 11/12/2010 - 15:41 | 722993 kathy.chamberli...'s picture

damn speaking of Sealy Posturepedic, i made my daughter to make her mattress a little lower and withdraw 10 Benjamin's from Sealy into her checking account and is buying

silver, bitchez

me 2, 160 – 1 oz American Silver Eagles @ $29.75 each.

Fri, 11/12/2010 - 15:44 | 723000 doolittlegeorge
doolittlegeorge's picture

should it worry me to know you have a kid or that her mattress is stuffed with silver coins?  not that i have anything against kids mind you....

Fri, 11/12/2010 - 22:23 | 724024 Double.Eagle.Gold
Double.Eagle.Gold's picture

Restocked with US 90% Silver, which IMO is best play. Silver 1oz Bullion carries premiums of 10-12%, where-as pre-1964 sells @ spot (zero premium). Think about it, is all that shinnyness worth a 10% premium, we think not.



Fri, 11/12/2010 - 15:06 | 722882 Nedly66
Nedly66's picture

Just cause the Fed gives money away doesn't mean the PD's have to plow it back into equities... Looks like they are using POMO to sucked in retail and exit their positions...


Then again, they could just be saving all their POMO money, letting the market dip a bit before making a huge push next week.



Fri, 11/12/2010 - 17:02 | 723291 Minion
Minion's picture

I totally agree, FWIW.  PD's ultimately control the money flowing into risk assets after the bond sales.  Banksters on the buy, until they get tired. 

Fri, 11/12/2010 - 21:05 | 723838 sub Z
sub Z's picture

Stocks slid, extending the biggest weekly slump in three months for U.S. benchmark indexes, and commodities tumbled amid speculation China will lift interest rates.

Fri, 11/12/2010 - 14:59 | 722855 cougar_w
cougar_w's picture

Heh. I put AAPL and CSCO on a chart this morning, knowing that they would move together. Didn't know they were that tightly overlapped among institutional investors, but not surprised at all. CSCO is so blown right now it's pathetic. AAPL tanking would be a rout.

Everything, hung from a thread.

Fri, 11/12/2010 - 15:00 | 722857 Randall Cabot
Randall Cabot's picture

Po-mo No-Mo

Fri, 11/12/2010 - 15:01 | 722861 plocequ1
plocequ1's picture

Fri, 11/12/2010 - 15:04 | 722873 pat53
pat53's picture

All depends when you bought them. If you've been holding AAPL for the last 18 months you've made a killing

Fri, 11/12/2010 - 15:05 | 722877 Spalding_Smailes
Spalding_Smailes's picture

Silver down 6% now ... Crash ? Turning point ?


We will seeeeeeeeee ...

Fri, 11/12/2010 - 17:05 | 723303 Minion
Minion's picture

I wouldn't be surprised if Banksters are unwinding some shorts today.  Buying, when the leveraged funds are in a panic.....

Fri, 11/12/2010 - 15:07 | 722884 InsanePonziClown
InsanePonziClown's picture

watch DB, deutch bank, this is germanys largest financial company, look at the chart, euro euro euro pean fund managers are dumping, and if theres is some big bear in the sky this is where he is pressing it

Fri, 11/12/2010 - 15:08 | 722891 Oh regional Indian
Oh regional Indian's picture

Big swings today. Big swing Fridays mean rumor filled weekends.

Maybe the last opportunity to truly get out of the market at some reasonable high and pile a little more into PM land.


Fri, 11/12/2010 - 15:08 | 722893 99er
Fri, 11/12/2010 - 15:10 | 722899 Spalding_Smailes
Spalding_Smailes's picture

Breaking support ???

Fri, 11/12/2010 - 15:45 | 723003 doolittlegeorge
doolittlegeorge's picture

$1300 is support

Fri, 11/12/2010 - 15:12 | 722907 goldmiddelfinger
goldmiddelfinger's picture

Put a fork in that apple !



Fri, 11/12/2010 - 16:01 | 723067 HarryWanger
HarryWanger's picture

Let's not get carried away, AAPL's only down 2% today and rising as I speak.

Fri, 11/12/2010 - 15:15 | 722916 max2205
max2205's picture

As you have shown there have been huge outflows. To PD's? Next bailout please

IMO most are hedged up here

Fri, 11/12/2010 - 15:17 | 722926 Die Weiße Rose
Die Weiße Rose's picture

Google will be next !

Fri, 11/12/2010 - 15:20 | 722936 Spalding_Smailes
Spalding_Smailes's picture

Not sure the android platform is whats killing apple .... They are giving it away for free ( phone builders ) so they control the front end. Very smart move by google ...

Fri, 11/12/2010 - 15:43 | 722996 kathy.chamberli...'s picture

Fri, 11/12/2010 - 15:17 | 722928 Aknownymouse
Aknownymouse's picture

Now here is what I think. The FED is now fully engineering the markets. The FED was setting a trap to the PM and commodities speculators in order to get them wiped out. That is to make sure taht the money they will print will go only towards buying stocks and not PMs and commodities which would hurt the consumer. And so the FED has orchestrated the following events: (1) The FED has ordered ICE and COMEX to increase margins on a few PMs and commodities yesterday and the day before. As a matter of fact - the margins on Silver and on Sugar were raised. That helped shake out many speculators so far. Also the rumor that was "spread" overnight about the chinese rate hike accelerated that goal. Who do you think spread that rumor??? and why last night??? at the same time of the margin rate increases and first over publicized POMO batch? (2) The FED has posptponed the POMO injection (and blamed it on some technical difficulty) - that is to expose all the speculators in commodities that were front running the FED. And so they pulled out the carpet from under them for a few monutes - enough time to get them naked and get the margin calls in to them. (3) JPM and other Primary dealers with the new printed $ are holding back until this commodities and PM dip is over and then they will swoop in with their billions to pump up the markets again. In the meantime you shorts would have had enough time to wrap the TZA/FAZ cords around your neck tight enough. (4) on the next unexpected ramp up job (maybe Monday morning) - they will get rid of a few equity bears too. Not bad for a fat bold guy - heh! (Not me .... Helicopter Ben).


My advice now is to buy banks. They are the ones holding the POMO keys and I am sure they will make sure that they will benefit.


Buy FAS!

Fri, 11/12/2010 - 15:29 | 722964 goldmiddelfinger
goldmiddelfinger's picture

You're the kinda guy ought be a great doctor but for preforming surgery with a 2X4 instead of a scalpel

Fri, 11/12/2010 - 15:46 | 723008 Aknownymouse
Aknownymouse's picture

tell me where I am wrong?

Fri, 11/12/2010 - 17:13 | 723330 Minion
Minion's picture

I agree about banks going higher.  JPM looks very bullish (MACD, Money flow, higher lows).  I was short JPM until it exploded to the upside, and I realized the ZeroHedge permabear environment had colored my judgement. 

For entertainment value, it's on wave 2 of 3, looking for another upside blast in the coming weeks.  :)

Fri, 11/12/2010 - 15:47 | 723012 doolittlegeorge
doolittlegeorge's picture

a healthy reminder that "paranoia is a two way street."  You know what they say..."just because you think they're watching ya'...DOESN'T MEAN THEY'RE NOT!"

Fri, 11/12/2010 - 16:05 | 723089 ConfusedIdiot
ConfusedIdiot's picture

Mouse says Fed is behind it. Everything tied to QEII. Frankly I'm puzzled. QEII is nothing more than the FED balance sheet converting IOU's with terms(ie bills and notes) to IOUs with no terms (ie FRN dollars). Wasn't QEI different? That is the FED turned trash into cash by allowing $1.8 of illliquid MBS to be converted to FRN's. Now that was a real change in the availability of purchasing power. But QEII has been pumped by everyone as something it just is not. The bonds and bills are AAA rated - the FED is buying $600 billion - that's not much compared to the $9 trillion and besides the holders could easily sell their UST's without the FED as buyer. Maybe Ben started his QEII hints in August banking on prop desks and hedge funds not understanding that there would be nor real "printing" or "adding to funds available" and this mis understanding would be enough to ignite an equity buying rally. It seems to have worked but the reality may be that  the buyers the last 2 months have spent their own funds in the mistaken belief that $600billion of new money was going to suddenly appear via the POMO. Heck the bond holders had reasons for owning AAA UST's to start with. If they sell to the FED they are likely to just reinvest in more bonds. So I remain your Confused Idiot.

Fri, 11/12/2010 - 16:28 | 723185 Aknownymouse
Aknownymouse's picture

QEII is swaping bonds with Cash.  The primary dealers could then use that cash to buy stocks (or whatever) with it.  So it is basically swaping bonds for stock market equity.  It is swaping high rated debt for high risk debt.  and SO the FED lowers interest rates and highers stock prices.  That's how I understand it.

Fri, 11/12/2010 - 17:56 | 723452 Ripped Chunk
Ripped Chunk's picture

Primary Dealers buying stocks?  Better check that charter again...............

Fri, 11/12/2010 - 15:18 | 722933 Spalding_Smailes
Spalding_Smailes's picture

What about the G.M. IPO ???

Fri, 11/12/2010 - 15:30 | 722965 Id fight Gandhi
Id fight Gandhi's picture

They can easily expand the ipo for more investors, even small investors to help pay back the taxpayer bailout. But nooooo they want the ipo to be smaller, get a big pop after it opens and help out the money changers again.

Fuck the taxpayer over and again.

Fri, 11/12/2010 - 15:49 | 723017 doolittlegeorge
doolittlegeorge's picture

buy, buy, buy.  "Now you see the violence inherent in the system!  LOOK!  LOOK!  I'm being oppressed!!"

Fri, 11/12/2010 - 22:51 | 724076 StychoKiller
StychoKiller's picture

Shut up -- Bloody peasant!

Fri, 11/12/2010 - 15:22 | 722942 Randall Cabot
Randall Cabot's picture

Hmmmm...makes sense.

Fri, 11/12/2010 - 15:25 | 722953 Caviar Emptor
Caviar Emptor's picture

Somebody yelled fire today. And the phony market confidence collapsed. Today's action is worse than what we saw during May.

Fri, 11/12/2010 - 15:40 | 722990 Lucky Guesst
Lucky Guesst's picture

It must of been JC because we've been hearing "fire" for a while and the markets have only soared. Knowing the truth in missiles and markets is above my pay grade.

Fri, 11/12/2010 - 15:35 | 722972 Ripped Chunk
Ripped Chunk's picture

That's gonna leave a mark.......

Fri, 11/12/2010 - 15:42 | 722976 Comrade de Chaos
Comrade de Chaos's picture

Whoever flees the first, loses the least !

All hail the HERD. (CA cows are the happiest cows out there... got margin? )

Fri, 11/12/2010 - 15:44 | 723001 NotApplicable
NotApplicable's picture

I see that Waddell & Reed is down $127,000,000.

Serves 'em right!

Fri, 11/12/2010 - 15:49 | 723016 papaswamp
papaswamp's picture

Perhaps everyone decided to pay attention to all the insider selling?

Fri, 11/12/2010 - 15:54 | 723026 CitizenPete
CitizenPete's picture

Low blow right in their pomo!  PM spot is smoldering a bit as well. VXX up 4.5%

Fri, 11/12/2010 - 15:55 | 723030 doolittlegeorge
doolittlegeorge's picture

What was this article about? Oh, yeah..."Group think."  Time for a little "moon-walking" boyz.  Now--"who was it that said that's a silver bullet in JPMorgan"?  Sounds an awful lot like the goobermint to me!  Time to re-read "revelations" folks..."the bill is coming due"--and it has never had anything to do with "bank bailouts." 

Fri, 11/12/2010 - 15:56 | 723040 NotApplicable
NotApplicable's picture

Oh, and somebody had better put David Tepper on suicide watch.

I wonder if AIG would sell me a derivative?

Fri, 11/12/2010 - 16:30 | 723193 Rider
Rider's picture

All those over-hyped products and stock pumpers are making me hate Apple already, really I do not believe they are the best thing on the world.

Fri, 11/12/2010 - 16:40 | 723227 drswhaley
drswhaley's picture

These holders all sold significant stakes to take part in GM IPO. 

Fri, 11/12/2010 - 16:46 | 723244 lizzy36
lizzy36's picture

I read this and immediately think skid marks, and bleach.

Fri, 11/12/2010 - 16:58 | 723281 nmewn
Fri, 11/12/2010 - 17:07 | 723309 TraderVix
TraderVix's picture

I read a lot of financial blogs. This site has the least amount of dissenting comments, by far. This post is a perfect example of Groupthink. Don't you think any of these institutions are hedged? This particular Tyler is retarded

Fri, 11/12/2010 - 17:18 | 723346 Minion
Minion's picture

You gotta admit, the FED had a serious problem on their hands with commodities being pumped higher than equities.  The new margin rules (if the FED is behind it) is the perfect solution - restrict capital flowing into assets that are not targeted for inflation so it has to flow uphill, into stocks.  Now to get speculators back in action in the RE markets....... muahahahaha, Blackhawk Ben must already have the smart bombs loaded and is flying the mission as we speak!


Fri, 11/12/2010 - 20:22 | 723753 Alchemist
Alchemist's picture

Tyler has been bashing AAPL ever since the stock hit 200.. Teh stock is up 55% since after comnig 3% off the highs.. woohooo!!! Look at all these massive losses on a 3% sell off.. Nevermind the fact that the stock is up 55% since February..

Now is probably a good time to get out.. But Tyler jsut looks dumb celebrating AAPL down 3% off the highs after being short for the 55% rally..


Sat, 11/13/2010 - 07:13 | 724431 sub Z
sub Z's picture

Everybody wear blue t-shirts!

Apple Computer Inc.'s Steve Jobs should give it up.

Some $85 million or so that the chief executive officer collected because of a sleight-of-hand the maker of the iPod music player and Macintosh computers engaged in when it awarded Jobs some mammoth stock option grants. That's money that should go back to the shareholders.


Apple's well-oiled public relations machine has said that because of ``irregularities'' in the grants, the options were canceled ``and resulted in no financial gain to the CEO.''


Nothing could be further from the truth.


Here are the facts:


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