| NEW YORK
NEW YORK Feb 21 American International Group
has replaced Apple Inc as the hedge fund
industry's favorite stock, according to a Goldman Sachs Group
analysis of fourth-quarter regulatory filings.
The American insurer, bailed out by the U.S. government
during the financial crisis, knocked Apple out of the top spot
in a list of stocks deemed most important to hedge funds,
according to a Goldman report released late Wednesday.
The fact that Apple has lost favor with many hedge fund
managers is not too surprising, given the 20 percent slide in
the stock in the fourth quarter. Still, Apple's fall from grace
follows a long run as No. 1.
"For the first time in three years was not the top
stock in our VIP list, instead ranking as the third most
frequent top-10 holding," the report said, adding that funds
reduced their Apple positions "by over 30 percent."
AIG was held by a number of well known hedge fund managers
at the end of 2012, including Daniel Loeb's Third Point, David
Tepper's Appaloosa Management and George Soros's personal money
management firm, according to quarterly 13-F regulatory filings
that became public last week.
Bruce Berkowitz's Fairholme Capital Management also owns a
major stake in AIG. Activist hedge fund Jana Partners added to
its AIG holdings in the fourth quarter.
Loeb began scooping up AIG shares in the second and third
quarters of 2012, arguing it is a "cheap restructured equity"
that has "significant upside," according to a recent Third Point
investor letter reviewed by Reuters.
AIG was one of the hedge fund's biggest winners in the
fourth quarter, the letter said. Shares of AIG rose 7.65 percent
in the quarter.
Loeb and several other notable hedge fund managers,
including Omega Advisors' Leon Cooperman and Eton Park's Eric
Mindich, dumped their Apple stakes in the fourth quarter,
according to regulatory disclosures filed in February.
Apple shares have tumbled in price since hitting an all-time
high of $705.07 on Sept. 21. They had fallen 24 percent by the
end of 2012.
The stock has continued to languish this year and was one of
the worst performers in the S&P 500 stock index in January,
dropping 17 percent as investors continued to worry about
increasing competition and declining profit margins.
The company is also now embroiled in a legal battle with
hedge fund veteran David Einhorn, who has been a proponent of
the technology giant for many years at his hedge fund Greenlight
Capital, even dispensing Ipod Nanos to investors as a gift in
Einhorn, who added to his hedge fund's Apple holdings in the
fourth quarter, has filed a lawsuit to block changes in Apple's
policy for issuing preferred stock. He is advocating that the
company issue a new class of preferred stock to share more of
its $137 billion cash pile with shareholders.