Apple Inc. (NASDAQ:AAPL) is no longer the most valuable company in the world according to market capitalization. The honor now falls to Exxon Mobil Corporation (NYSE:XOM) once again.

An oil company holding this title seems to reassert the natural order, but the news will not be well received by hedge funds, who are more than likely watching their returns slide in the wake of Apple’s fall from grace.

apple stock falling

As of this afternoon Apple is worth just $412 billion. As we’ve pointed out before, the company has around $130 billion in cash, that means the market actually values the company at around $280 billion. That’s pretty low for a company that had more than $150 billion in revenue in 2012.

Apple Inc. (NASDAQ:AAPL)’s problems are centered around its most recent earnings report. The firm beat Wall Street’s analysts expectations, on EPS, but didn’t sell as many iPhones as had been hoped. The firm’s stock has fallen by more than 12 percent in the last couple of days, something that has not gone unnotice by hedge funds.

Apple Inc. (NASDAQ:AAPL) is one of the stocks most widely held by hedge funds. The logic for holding the firm’s stock, was crystallized by David Einhorn, of Greenlight Capital, last May.

“Apple Inc. (NASDAQ:AAPL) trades at a lower multiple than the average company in the S&P 500. A below-market multiple implies that this is a below-average company. We have a hard time seeing how anyone ranks Apple as below average,” Einhorn wrote in a letter to investors.

That logic seems as solid not as it was then. Apple’s P/E stands at 10 today, and without cash it’s well into the single digits. That’s well below the average S&P 500 company, and Apple, by traditional valuation metrics would be worth more. Reality doesn’t always bear out the market’s valuation metrics, and hedge funds are losing badly.

Einhorn is a big investor in Apple, he held 1.1 million shares in the firm at the end of Q3 2012, and he bought more as the price fell in the last three months. Other big hedge funds invested in Apple include Tiger Global Management, who held 1.3 million shares at the end of Q3, Third Point LLC held a position of 700,000 at the end of that quarter, and D.E. Shaw held more than 1.5 million shares at the end of that period.

If Apple Inc. (NASDAQ:AAPL) doesn’t pick up, and revalue itself according to the metrics Einhorn and others are trying to impose on it, the first quarter returns are bound to be disappointing. Einhorn lost 4.9 percent in Q4, largely because of the price drop in Apple shares.

The symbolic swap of hats, with Exxon Mobil Corporation (NYSE:XOM) retaking the top spot in market valuation, doesn’t mean anything really, but symbolically it does say a lot. Oil is stable in the eyes of the market, technology, no matter who’s doing it, is not.

Exxon Mobil Corporation (NYSE:XOM) has not seen its market cap shift around too much in the last year; however, Apple has seen its market cap bounce up and down on headline pressure. The company’s now have a similar P/E. The market trusts companies it’s dealt with for a long time, Apple Inc. (NASDAQ:AAPL) doesn’t seem to count.

Hedge funds are losing and losing big on the current movements in Apple Inc. (NASDAQ:AAPL) stock. After a bad 2012, and a really rough 2011, hedge funds need to have a strong 2013 to restore confidence. With the fall in Apple stock, the stock most widely held by hedge funds, hedge funds are looking at another difficult quarter. First quarter returns are bound to be interesting reading material.