Unstructured Finance

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.

By Matthew Goldstein

All too much of what we do in financial journalism is rush around to get the “scoop” on some big announcement by some corporate chieftain. Things like, the announcement of a new product, a management reshuffling or a bunch of firings. All important stuff and all stuff that could impact earnings and stock movements. But sometimes the big picture of what really is working for a company or is ailing it, gets lost in the scoop chase.

So that’s why we took a step back to look at some potentially radical solutions for fixing Bank of America, which right now has come to represent much of what remains broken with the U.S. housing market.

The point of the story was to look at ideas that bank CEO Brian Moynihan might be reluctant to do. Ideas that would drive shareholders and bondholders batty. But the kind of ideas that ultimately may be necessary to not only fix the bank, but also repair the nation’s sick housing market and equally sick economy.