Apple Inc. (NASDAQ:AAPL) stock has been stuck between $490 and $550 for quite a while. On the other hand, Tesla Motors Inc (NASDAQ:TSLA) has become the darling of the Wall Street. Its stock is reaching a new record high almost every other day. But neither of them is the favorite of institutional investors. Morgan Stanley analyst Katy Huberty said in her latest research note that hedge funds, mutual funds, banks and other big financial institutions have jumped off the Apple bandwagon. And they have yet to climb aboard Tesla.
Apple’s institutional holding falls to 5-year low
Morgan Stanley looked at the institutional ownership data since 2009. The research firm found that the top 30 institutional shareholders, on an average, own 30-50% of a large-cap company’s total shares. Overall, institutional investors own an average of 83% shares outstanding in the S&P 500. And it’s been increasing by about 80 basis points every year as individual investors are exiting single stocks in favor of mutual funds.
Other companies such as Microsoft Corporation (NASDAQ:MSFT), Google Inc (NASDAQ:GOOG), Amazon.com, Inc. (NASDAQ:AMZN) and Hewlett-Packard Company (NYSE:HPQ) are doing much better. Their institutional ownership is near record highs. But Apple Inc. (NASDAQ:AAPL)’s institutional ownership has fallen to the lowest level since 2009. Katy Huberty said that the top 30 institutional investors own only 30% of Apple’s total outstanding shares. That’s down from its 5-year average of 36%, and the 2009 peak of 40%. Moreover, the top 30 holders have allocated only 2.2% of their total AUM to the iPhone maker, compared to the 5-year high of 4.1%.
Institutional investors overcautious about Apple
Huberty did not provide specific data on Tesla Motors Inc (NASDAQ:TSLA). But she said that institutional investors haven’t yet started taking big positions in the electric vehicle maker. Tesla’s shares soared to a new record high in pre-market trading Thursday after the company announced to invest $5 billion to build a gigafactory. The plant will start production in 2017, and will produce enough Li-ion batteries to power 500K cars every year.
Katy Huberty has an Overweight rating on Apple Inc. (NASDAQ:AAPL) with a $630 price target. She said that institutional investors have grown overcautious about the tech giant as it is working on new products and services such as iWatch, iTV and mobile payments. Apple shares fell 0.49% to $514.87 in pre-market trading Thursday.