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Step Aside Apple: Presenting The Hedge Fund World's Newest Most Widely Held Stock

Tyler Durden's picture




 

Quarter after quarter we would recap the hedge fund world's infatuation with one stock and one stock alone: Apple. This inverse-mormon love affair hit its peak in the quarter ended September 30, when a record number of hedge funds were invested in AAPL stock. This was also the quarter when AAPL hit its all time high price and has since proceeded to slump by nearly 40% in four short months. Which was to be expected: hedge fund hotels always become flaming death traps when the sucker rally finally ends and what so many mistook and goalseeked for fundamentals, ended up being merely euphoria and momentum chasing as one after another marginal buyer put their money into a stock that seemingly could do no wrong or so we were told day after day. As of December 31, AAPL is no longer the darling of hedge fund groupthink. In its place we have a new hedge fund hotel.

Presenting: AIG, which with 80 hedge funds reporting it as a Top 10 holding (compared to GOOG with 73, and AAPL with 67), is now the stock that has suckered in the most hedge fund capital, and where any future growth will depend solely on pulling incremental dumb money in.

As a reminder: just as every most widely held name rises ever higher as the Beta chasers pretend they generate Alpha, while merely piling into one or several names, so once hotel, in this case cAIGfornia, starts burning down, the scramble for the exits is fast and furious.

The chart below shows AAPL's recent gradual rise and epic fall. AIG is now in the rising phase. The fall always follows.

Finally, it would be especially poetic if the one company that was there at the end of the beginning, and nearly brought down the financial system 5 years ago is responsible for the beginning of the end, and whose collapse the second time around completes what its first, bailed-out attempt, couldn't.

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Wed, 02/20/2013 - 20:45 | 3261758 williambanzai7
williambanzai7's picture

This is the epitome of the dumb money follows dumb money principle.

Wed, 02/20/2013 - 21:10 | 3261814 JR
JR's picture

The pond alga is rising to the top. When you’re talking about free enterprise prosperity and AIG is at the top, you’re talking about a world that’s failing.

ekm got it right yesterday, as usual:

“What have I been telling, it's been months?

“Same batch of stocks are getting bounced between primary dealers.

 “Any point above SP 1000, retail is simply priced out. Primary Dealers have pushed up the price of S&P from 1000 to 1500 by simply rotating the same batch of stocks in the eternal hope of luring suckers.

“Again, suckers are priced out at 1000, unless, unless.........they can manage to plunder the pension plans (fonzanoon's idea).

“However, I do not think there's enough saved money to be suckered into. That would require the implicit cooperation of pension fund managers and I don't think anybody would be so stupid as to fall for that.”

Wed, 02/20/2013 - 21:23 | 3261840 prains
prains's picture

This is the epitome of the dumb money follows dumb money principle.

 

it's the real american way willie B

Wed, 02/20/2013 - 20:48 | 3261764 SillySalesmanQu...
SillySalesmanQuestion's picture

Uhhh, is this Friday afternoon humor....?

Wed, 02/20/2013 - 21:32 | 3261846 ebworthen
ebworthen's picture

There must be an AIG booster or three haunting this post.

Saw a bunch of those pricks wasting taxpayer money at a ski resort this Winter.

What a waste of humanity, the fucking shills; a cloister of parasites, leeches, and societal tapeworms.

Other than that they were probably pretty decent fellows, in their Mother's eyes.

Wed, 02/20/2013 - 21:40 | 3261872 MachineMan
MachineMan's picture

Ain't It Good

Wed, 02/20/2013 - 21:50 | 3261895 darteaus
darteaus's picture

Ain't It Gone?

Wed, 02/20/2013 - 21:44 | 3261883 Chris88
Chris88's picture

A hedge fund I used to work at that knows the ins and outs of financial services better than any other, purchased a ton of AIG last quarter.  I would definitely not be on the other side of the trade given their track record.

Thu, 02/21/2013 - 00:16 | 3262247 Clowns on Acid
Clowns on Acid's picture

Yeh, AIG has made the same moves as the big banks. Let the Fed buy all the bullshiite assets (MBS / securitized crap) off the balance sheets and match the liabilities with USTs and UST swaps.

The big banks and insurance companies have shifted their risk onto the Fed's balance sheet. I think that some of the hedge funds have figured this out.

The liquidity crisis of 2007 will not be repeated. Equiites will go down further...but the banks liquidity / exposure to the shadow banking  structures are not there like in 2007.

Future default rates on credit cards, car loans, mortgages, etc ...might get a lot worse and threaten the banks again...but that is down the road a piece.

Wed, 02/20/2013 - 21:49 | 3261892 darteaus
darteaus's picture

Talk about not learning from one's mistakes....

Wed, 02/20/2013 - 23:40 | 3262173 tooktheredpill
tooktheredpill's picture

surely its a typo somewhere and they are all short. does Cassano still work there? short whatever company he is working for.

Thu, 02/21/2013 - 01:09 | 3262323 Grand Supercycle
Grand Supercycle's picture

AAPL Parabolic Irrational Exuberance. . .

As mentioned in 2012 vertical moves for any stock,commodity etc are unsustainable.
Charts don't lie.

AAPL monthly chart as of February 5, 2012 & posted February 10, 2012.
http://trader618.com/2012/02/10/aapl-parabolic-irrational-exuberance

AAPL monthly chart as of April 4, 2012 & posted April 9, 2012.
http://trader618.com/2012/04/09/aapl-parabolic-irrational-exuberance-2

Thu, 02/21/2013 - 02:42 | 3262437 q99x2
q99x2's picture

AIG is the symbol of Financial Fraud. What the heck that's what the world is run on. None better than AIG to funnel workers money through. It works if you work it.

Thu, 02/21/2013 - 10:17 | 3262993 Shizzmoney
Shizzmoney's picture

It will be great if the govt had to bailout AIG AGAIN......

It won't need to bailout Google, which is already a quasi-government agency, and a sub-division of the NSA.....

Thu, 02/21/2013 - 11:06 | 3263182 moneybots
moneybots's picture

"and where any future growth will depend solely on pulling incremental dumb money in"

 

Here it comes- i just heard this morning that some analyst placed a $1,000 price target on GOOG.

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