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As Of September 30, Hedge Fund Hotel AAPL-fornia Added One More Guest

Tyler Durden's picture




 

The days just prior to the end of the third quarter now appear like a million years away, and a hundred S&P point away, but they were marked by one notable thing: the price of AAPL hit an all time high just days before the quarter ended. Which is why we read with great interest the quarterly Hedge Fund tracker update by David Kostin, which has been aggregating the popularity of the most prominent hedge fund-beloved names, and which as readers are well aware, has for the past two years been primarily one name: AAPL.

 And yet, even with the stock price hitting a lifetime high of over $700/share, which in turn would have assumed even more momentum chasers should have jumped in, June 30 saw the world's most popular hedge fund hotel in history rise by just one tenant for the entire quarter, as the number of Hedge Funds owning the stock, rose to a new record, but by the tiniest of increments: from 230, as of June 30, to 231, on September 30. It is thus safe to say that with barely any incremental holders jumping in when the stock was rising to its all time highs, the recent weakness is only and purely a function of the rising trajectory in hedge fund tenants at Hotel AAPL-fornia finally having been broken, as first one then more holders quietly slip out of the world's biggest hedge fund hotel in the quiet of the night while the receptionist is still taking a bathroom break. The only question is how many. That is an answer we will have in mid-February when the December 13Fs are released.

Total HF holders:

And the most popular Hedge Fund stocks as of September 30:

None of the above should come as a surprise to those following the recent violent gyrations in the stock, which always accompany broad capital in and outflows. What should come as a surprise are some of the other findings in this quarter's HF tracker. Such as that even hedge funds are now largely confused, if not clueless, what to invest in, sitting on existing positions without any desire to rotate in or out of positions.

Hedge fund turnover hit record low in 3Q

 

Turnover of all positions averaged 29% in 3Q, the lowest level in at least 10 years. This trend was also evident in our Hedge Fund VIP list. The top 25 stocks that matter most to hedge funds were unchanged from last quarter.

No surprise then that more and more hedge fund "legends" are just saying to hell with it, and leaving the market in diguise. Fairly soon, only master stock traders on Twitter, and those fast, fast money experts on CNBC, will be the only one making (monopoly) money, as everyone else will be done with the stock market.

And the second, and more troubling conclusion:

Sector positioning presents risk if consumers fall off the ‘fiscal cliff’

 

Consumer Discretionary remains the sector with the largest aggregate hedge fund allocation and constitutes 24% of our VIP basket. Stocks in highly-weighted consumer subsectors may underperform if rising taxes affect consumer spending, representing risk to fund performance in 2013.

Said otherwise, if the miraculous, neverending purchasing power of the US consumer is indeed nearing an end, and recent economic data certainly point in that direction, then it is not the AAPL sell off that will be hedge fund killer, but the panic that would result from the wholesale dump of anything "consumer discretionary"-related should the fiscal cliff manifest itself in any of its less than agreeable outcomes, and in turn, lead to loss of broad purchasing power by the one driving force accountable for 70% of US GDP.

Of course, if indeed the US consumer is approaching the end of their purchasing capacity, then we have bigger problems to worry about than the fate of a few millionaire hedge fund presidents.

 

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Mon, 11/19/2012 - 21:32 | 2997626 fonzannoon
fonzannoon's picture

Why is everyone scrambling into muni's? They are going to be spared? Especially the 250k and up crowd....I don't get that move.

Mon, 11/19/2012 - 21:44 | 2997653 NotApplicable
NotApplicable's picture

Uncle Sugar backstop. Well, once enough people cry UNCLE!!!

 

Mon, 11/19/2012 - 22:38 | 2997747 Pool Shark
Pool Shark's picture

 

 

"You can checkout anytime you want,

But you can never leave..."

 

Mon, 11/19/2012 - 23:07 | 2997810 Tsar Pointless
Tsar Pointless's picture

Sorry, but to be picky, it's "like", not "want".

http://www.lyrics007.com/Eagles%20Lyrics/Hotel%20California%20Lyrics.html

Tue, 11/20/2012 - 01:57 | 2997984 Michaelwiseguy
Michaelwiseguy's picture

This Daily Paul contributer made a great effort in explaining a pet peeve of mine that I'm just to lazy to articulate these days, and I'm glad I don't have to reinvent the wheel. It would be nice if ZH did some articles on this subject. As are many people on this site trying to fix what is wrong with our country;  Compared with all internet users, the ZH users are disproportionately Caucasian, and they are disproportionately higher-income, childless men over the age of 35 who have postgraduate educations. I fit into the category and would just like to have something decent to look forward to for what is left of my life.

The Big Picture..that nobody talks about.

It would appear, from recent discussion, that many are focused on those aspects, both econonic and political, that challenge the stability, security and economic growth of a nation. Many identify the symtoms, and search for the answers, but don't fully understand the disease.

The disease that eminated many decades ago, embraced in the 1960's by most developed western nations, that now could be considered terminal, if not addressed systematically.

Globalisation.

When you understand the root cause, you come to understand the role of such issues as, that of oil, the petrodollar, interventionism, socialistic trends, the centralised banking system, the NWO and other issues that seemingly defy logic when viewed in isolation.

GLOBAL POWER SWAY.

Globalization: Its insidious agenda and diabolical consequences.

........

Regrettably, the very ilk of people [economists] who incessantly convey directions on what has to be now done, to assuage our financial woes are, in reality, the ‘very ilk of people’ who instigated the economic calamity we’re now in. Of course, just about all of those currently dispensing advice on how to deal with the present catastrophe had absolutely nothing directly to do with globalisation occurring. However, they would know only too well that, the plans that had being drawn up way back in the 1950’s, to “globalize markets” are, in fact, the sole cause of our present problems. Yet, when these contemporary oracles appear in the media espousing their wisdom on how to solve the present mess they neglect to tell us that, it was economists who created the problems we’re now experiencing in the first place.

 ........

 As a result of this, hardly a week has gone by in the last 30 months in which, President Obama or someone from the government, doesn’t say: “We’re working hard to find ways to get people back to work”. Regrettably, unemployment figures have continued to hover over 9% for three years, which is bad enough in the short-term; but that figure is foreboding for an extended period. And I will reiterate that, a key part of the reason for high unemployment rates is due, to the US having haemorrhaged over 60% of its manufacturing sector jobs since 1980. But that, of course, is only an element of the equation and primarily accounts for people over the age of 40 with non-college and tertiary level educations.

 http://www.dailypaul.com/263616/the-big-picturethat-nobody-talks-about

 

 

Tue, 11/20/2012 - 08:08 | 2998255 GetZeeGold
GetZeeGold's picture

 

 

Sorry, but to be picky, it's "like", not "want".

 

Get your crap straight you anal retentive bitchez.

Mon, 11/19/2012 - 22:32 | 2997668 Big Beta Bill
Big Beta Bill's picture

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Mon, 11/19/2012 - 23:07 | 2997807 Ballin D
Ballin D's picture

Shot in the dark here but maybe realizing their gains and moving their money in anticipation of tax hikes?

Mon, 11/19/2012 - 23:18 | 2997829 fonzannoon
fonzannoon's picture

i hear you, i mean isn't muni interest going to be on the table for the 250k and up crowd? Therefore making them much less attractive.

Mon, 11/19/2012 - 21:36 | 2997635 q99x2
q99x2's picture

Looks like the trajectory is on course for one big AAPL pie.

Mon, 11/19/2012 - 21:46 | 2997651 LetThemEatRand
LetThemEatRand's picture

"Said otherwise, if the miraculous, neverending purchasing power of the US consumer is indeed nearing an end, and recent economic data certainly point in that direction, then it is not the AAPL sell off that will be hedge fund killer, but the panic that would result from the wholesale dump of anything "consumer discretionary"-related should the fiscal cliff manifest itself in any of its less than agreeable outcomes, and in turn, lead to loss of broad purchasing power by the one driving force accountable for 70% of US GDP."

Supply-siders have been beating the shit out of the demand side (middle class consumers) for 40+ years.   No one should be surprised at the outcome.  For the last 20 years, purchasing power was replaced with borrowing power, fed [pun intended] by unsustainable bubbles in stocks and real estate.  Atlas bit off his nose to spite his face.   It's odd that those who espouse the righteousness of the CEO class fail to see the utter stupidity of the business model that systematically destroys the purchasing power of the consumer to buy the CEOs' products and services.  

Mon, 11/19/2012 - 22:39 | 2997754 PY-129-20
PY-129-20's picture

"Brand paranoia

This is the opposite of brand ego and is most likely to occur when a brand faces increased competition. Typical symptoms include: a tendency to file lawsuits against rival companies, a willingness to reinvent the brand every six months, and a longing to imitate competitors."

Mon, 11/19/2012 - 22:43 | 2997756 LeisureSmith
LeisureSmith's picture

No surprise then that more and more hedge fund "legends" are just saying to hell with it, and leaving the market in di(s)guise.

The masked avengers of wallstreet.

Mon, 11/19/2012 - 22:41 | 2997760 babylon15
babylon15's picture

All the data presented suggests hedge funds are underweight Apple by about a factor of 2.  For example take the $818 billion number.  That's the visible amount invested by these hedge funds.  The total S&P 500 capitalization is $15 trillion.  818/15000 is 5.4%.  If they just threw that $818 billion into a cap-weight S&P 500 tracker, they would own 5.4% of Apple but the data shows they only own 3%.  But, it's probably even lower than this because there is probably some money on the short side.  Probably all the short interest is hedge funds, so the net exposure to Apple is more like 2% when it should be 5.4% if they were just tracking the S&P 500.

I'm not saying they're right or wrong, I'm just saying the headline is not an accurate description of the data.  If Apple went down a lot, hedge funds as an asset class would probably come out ahead of index funds.

Tue, 11/20/2012 - 00:20 | 2997935 Augustus
Augustus's picture

Nice note.

Mon, 11/19/2012 - 23:14 | 2997822 Zer0head
Zer0head's picture

Spain looking okay

Spain: Residency for foreigners who buy houses

 

http://hosted.ap.org/dynamic/stories/E/EU_SPAIN_FINANCIAL_CRISIS?SITE=AP...

Mon, 11/19/2012 - 23:16 | 2997826 HaroldWang
HaroldWang's picture

And they all came storming back in at lower levels to run it up again by EOQ. Works like a charm. And it'll more than likely, keep climbing for a while.

Tue, 11/20/2012 - 01:09 | 2997985 caerus
caerus's picture

aapl just traced out it's head on a massive head and shoulders...long for now

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