Hedge funds stockpiled Citi, axed Apple in Q4

March 12, 2013

More research was published today showing that the honeymoon is over for American hedge fund managers and technology giant Apple. The iPhone maker was one of the top two most sold stocks by hedge funds in the fourth quarter, according to an analysis of regulatory filings by Bank of America. (The other stock was  Tyco International).

This industry-wide ditching of Apple came as AIG  replaced the iPhone maker as hedge fund land’s most loved top-10 stock holding in Q4. It was the first time Apple had been knocked out of pole position in three years. For a list of some of the big names that ditched Apple, see this story by Aaron Pressman.

Meanwhile, BofA analysts found that the top two stocks purchased by hedge funds in the three months to December were  Facebook and Citigroup. The AIG and Citi buys were part of a larger move into financials by hedge funds in the fourth quarter, the BofA Hedge Fund Monitor report showed, and away from technology companies.

According to the report:

Discretionary became the most favored sector in 4Q’12 … as hedge funds continued to switch from Tech into Financials.  Hedge funds increased weight in six out of 10 sectors, led by Financials and  Energy, by 2.7% and 1.0%, respectively. Weight in Technology and Healthcare decreased the most…

Hedge funds aggressively bought Financials to 18.1% of portfolios by the end of 4Q12, the highest since our record started in 2005; dollar value was $76bn in 4Q12 compared to $58bn in 3Q12. The interest in Financials was concentrated in Insurance and Diversified Financials Services.

However, among the so-called ‘mega-funds ‘- the 150 largest hedge funds – tech stocks are still favored over financials.  And looking at the entire hedge fund industry,  regardless of the size of the position, Apple was still the most widely held stock by managers at the end of 2012, followed by AIG, then Google, then Citi.

But among the top 20 stock holdings of the 150 biggest hedge funds, AIG topped the list. It was followed by Google, then Citi. Apple didn’t make it onto the podium – it placed 4th.

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