Hedge funds warm to Apple; Omega re-enters, Soros buys more
NEW YORK (Reuters) - Apple Inc (AAPL.O) is regaining its popularity among the biggest hedge funds, some of which have said a massive sell-off this year has gone too far.
After Apple was dumped left and right starting in late 2012, noted stock picker Leon Cooperman of Omega Advisors re-entered Apple shares in the second quarter, while George Soros's Soros Fund Management LLC increased its stake and Greenlight Capital's David Einhorn held on to his 2.4 million shares, according to quarter regulatory filings on Wednesday.
Cooperman, whose hedge fund had roughly $7 billion in assets last November, took a new position of 31,000 shares in the iPhone, iPad and Mac computer maker after selling 266,404 shares of the company in the fourth quarter of last year.
Soros increased his stake in Apple by 40,000 shares to 66,800 shares in the second quarter, his filing showed.
Cooperman's and Soros's filings follow a post on Twitter by billionaire activist investor Carl Icahn yesterday that he had taken a "large position" in Apple and that the company is "extremely undervalued."
Icahn said in a telephone interview that he believes the stock could be worth as much as $700 a share if Chief Executive Tim Cook pushed for a larger stock buyback.
Icahn said Apple has the ability to do a $150 billion buyback now by borrowing funds at 3 percent. "If Apple does this now and earnings increase at only 10 percent, the stock - even keeping the same multiple currently - should trade at $700 a share," Icahn said.
Shares of Apple fell 10.4 percent in the second quarter and are down 6.3 percent this year. The company, which once led the smartphone market, has increasingly come under threat from Samsung Electronics (005930.KS), whose Galaxy "phablets" have become more popular.
Einhorn said in a quarterly note to investors dated July 26 that investor sentiment toward the stock was "incredibly bearish" but that he expected the shares to recover. He also said Apple was in a "better competitive position" than Samsung.
Shares of Apple rose to an all-time high of $705.07 on September
21 but ended 2012 down more than 24 percent from that peak, as investors worried about increasing competition and declining profit margins.
Apple has "huge borrowing power, little relative debt and trades at a low multiple," Icahn said.
Apple was not listed in Icahn's portfolio at the end of the second quarterly filings, meaning he bought its shares in the last 45 days.
Philippe Laffont's Coatue Management also boosted its stake by about 388,000 shares to roughly 1.6 million shares during the second quarter, while Maverick Capital increased its share stake in Apple by 13.7 percent to 784,412 shares, according to regulatory filings.
Viking Global Investors, meanwhile, took a new stake of 112,200 shares in the company.
Other hedge funds scaled back on the tech company.
Tiger Veda Management trimmed its stake by 15 percent to 41,365 shares, while Chase Coleman's Tiger Global Management sold its stake of 260,000 shares.
David Tepper's Appaloosa Management cut its stake in Apple by 29 percent but still held 383,004 shares at the end of the second quarter.
Apple shares rose almost 5 percent to close at a seven-month high of $489.57 on the Nasdaq on Tuesday after Icahn revealed his stake. On Wednesday, the shares were up 1.8 percent, at $498.50, at the close of trading, after rising to $504.25 in intraday trading.
(Reporting by Sam Forgione; Editing by Steve Orlofsky)