Apple Inc. (NASDAQ:AAPL) has historically been one of the most popular long positions for hedge funds, while Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) has been one of the popular shorts in recent years. However as BGR’s Tero Kuittinen notes, the performance of some of the most well-known funds has seen better days thanks to these two trading ideas.
Apple, BlackBerry Heading In Opposite Directions
Apple Inc. (NASDAQ:AAPL)’s stock price has fallen significantly, dropping from $700 per share to $400 per share over the winter, while Research In Motion’s stock showed small signs of recovery, leaping from $6 per share to as high as $18 per share. But then by the time spring rolled around, the BlackBerry maker once again became a popular short position among hedge funds while Apple Inc. (NASDAQ:AAPL) became a favorite long position.
It looked like Apple was making a recovery in April when its stock went to $450 per share, but now it’s trading for just under $400 per share. Meanwhile Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) is up again, gaining another 2.4 percent ahead of tomorrow’s quarterly earnings report.
The Problem With Predicting The Handset And Tablet Industry
Kuittinen points out that the handset and tablet industry have become very difficult to predict, and as a result, hedge funds which are oriented toward the tech sector have been underperforming the NASDAQ and the S&P 500 by quite a bit over the last year.
It’s certainly been anyone’s guess about which handsets will do well. Most hedge funds which returned to shorting Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) did so because it was expected that when the interest over the newly released BlackBerry Z10 died down, so would excitement over the company. But then the BlackBerry Q10 was released, and some analysts say it appears to be selling better than the Z10 because it has the trademark keyboard BlackBerry has been known for.
And as analysts raise their handset estimates for tomorrow’s report from Research In Motion, many of them are also slashing their iPhone estimates for Apple Inc. (NASDAQ:AAPL). Kuittinen believes we might see a short squeeze on BlackBerry shares if the company sells over 3.5 million units. If that happens, the stock price could rise back to $18 per share.
It should be quite interesting to see what the hedge funds report in their next SEC filings to find out what’s happening with these trends regarding Research In Motion Ltd (NASDAQ:BBRY) (TSE:BB) and Apple Inc. (NASDAQ:AAPL). How much will the top hedge funds’ performances be affected?