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Why Apple shares could fall

Monday, June 20, 2016 - 01:12

Apple is about to lose its weighting on the Russell Indexes and be reclassified as a growth and value stock. Fred Katayama reports.

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REFEEDING: ADDS THAT THERE ARE NO RESTRICTIONS AND INSERTED REUTERS BUGS Get set for a possible fall in Apple shares. Apple's weighting in the Russell indexes could fall when FTSE Russell recalibrates those indexes this Friday. Two factors: One, it will get a lower weighting on the indexex because its market capitalization has shrunk and Apple has reduced its outstanding shares through buybacks. That means fund managers pegged to the index have to sell Apple shares to match that lower weighting. Two, the iPhone maker, which had been seen as a growth stock, will be reclassified as a growth and value company. That means managers of value funds will be buying Apple shares and those of growth funds will be selling them. A Credit Suisse index strategist says that will result in a net selling of Apple because more of its shares are benchmarked to growth than value. Tanaka Growth Fund manager Graham Tanaka said, "Indices are moving to confirm what the market has already been saying, which is it is a growth and value stock." No wonder famed value investor Warren Buffett took a big bite of Apple. He disclosed in May he had bought nearly $1 billion worth of shares.

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Why Apple shares could fall

Monday, June 20, 2016 - 01:12