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Hedge funds fingered for Apple’s slide

Aaron Pressman (via Reuters/ SMH) | Feb. 15, 2013
Despite Apple's stock price plunge, most of the managers likely exited their positions with substantial profits because they bought years earlier.

Hedge funds fingered for Apple’s slide

Photo: AFP

Some of the biggest hedge funds that helped make Apple a stock market darling lost faith and dumped their stakes in the fourth quarter, fuelling the massive drop in the iPhone maker's share price.

Noted stock pickers including Leon Cooperman and Thomas Steyer unloaded billions of dollars of Apple shares between September 30 and December 31, according to disclosure documents filed on Thursday.

Shares of Apple rose to an all-time high of $US705.07 on September 21 but ended 2012 down more than 24 per cent from that peak, as concerns about increasing competition and declining profit margins weighed.

The fourth-quarter sellers avoided even deeper losses. Apple's shares have lost 12 per cent so far this year. The shares gained $US1.95, or 0.4 per cent, to $US468.96 on the Nasdaq on Thursday.

Sellers include Omega, Farallan, Jana

Cooperman's Omega Advisors fund dumped its entire stake of more than 266,000 shares during the fourth quarter, according to its required quarterly disclosure form filed with the Securities and Exchange Commission.

Farallon Capital, the hedge fund founded by Steyer, sold 137,000 shares. Steyer, who once worked on the Goldman Sachs risk arbitrage desk, stepped down at the end of the year from the firm, which he founded in 1986.

Jana Partners, an activist fund run by Barry Rosenstein, also unloaded its entire Apple stake of more than 143,000 shares.

Despite Apple's stock price plunge, most of the managers likely exited their positions with substantial profits because they bought years earlier.

Rosenstein and Cooperman, for example, both started gathering their stakes in the middle 2010, at a time when Apple shares traded below $US300.

New focus from Einhorn

At the time, the company's iPhone 4 was beset by alleged faulty reception, a problem that became known as "antennagate". Apple's then-chief executive, the late Steve Jobs, famously dismissed the issue, saying "we don't think we have a problem." But Apple offered customers a free bumper case that was supposed to minimise any issues.

Customers did not seem to care, snapping up millions of iPhones and sending Apple's share price up almost 50 per cent over the next year.

Apple has come under further scrutiny, this time from prominent hedge fund manager David Einhorn, who said on February 7 that he was suing the company to get it to deploy its $US137 billion cash pile more effectively and halt a 35 per cent drop in its share price from the record high in September.

Einhorn's fund, Greenlight Capital, has a stake in the company worth about $US600 million. Greenlight's regulatory filings are to be released later today.

 

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