A popular hedge fund has moved against the trend by dumping Apple stock and betting big on Microsoft
Apple has been dropped by the popular hedge fund Bridgewater Associates, and the firm’s current holding was cut by half as of the end of 2014 compared to the third quarter of 2014. During the same period, the hedge fund raised its bet on tech juggernaut Microsoft.
A bold move to dump Apple
The iPhone maker is seeing a startling rise in its shares, but hedge funds like Bridgewater Associates are going against the flow. The firm’s total holdings in Apple at the end of 2014 was $28.6 million, a drop from $53.9 million from the end of the third quarter of 2014. During the same period, the hedge fund increased its Microsoft holdings 4,000% from just $679,000 at the end of the third quarter to $27.9 million at the end of 2014. It should be noted that the equity holdings represent a small fraction of the $160 billion plus managed by the fund.
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Bridgewater’s move to drop Apple could be called audacious in the event that it is betting through its money. Hedge funds are known as “smart money” because they have substantial funds to make bets, which are generally against the current market movement. Wall Street analysts, on the other hand, are not confident enough to raise their voice and take a cautious note on Apple’s continuously-rising stock.
Strategy not worked so far
Dumping Apple stock and taking up Microsoft has not worked very well for Bridgewater so far this year, says a report from USA TODAY. Apple stock has been in the uptrend after reporting record iPhone 6 sales for the fourth quarter. On the other hand, Microsoft has been witnessing declining investor confidence, as its shares have dropped because the company’s move into faster growing areas is taking more time than expected.
Apple is making high-end smartphones and selling them at high prices and making consumers buy costly cell phone plans compared to smartphones that have exciting and comparable features at only a fraction of the cost. Loyal iPhone fans and new users make the business run as a loop for the company, which is making profits like the U.S. has never seen before.
Apart from hedge funds, there are a few analysts who are talking against Apple. On the other hand, there are investors who are confident about Apple becoming the first U.S. $1 trillion company.