Click to enlarge.
Katy Huberty, Morgan Stanley’s chief Apple (AAPL) analyst, issued an elaborate report Monday entitled AAPL: How Do You Do Risk Management? that I can’t pretend to understand completely — not even the title.
But two takeaways are clear: (I quote)
- AAPL is the most widely held US company among hedge funds, with 26% of all large hedge funds holding positions of 1% or larger, and 10% holding positions 5% or larger (as of March 2012). One in 25 total hedge funds has a 10% or larger position in AAPL.
- AAPL has had persistent growth and low quality (junk) biases.
Expanding on that second point, she writes:
“According to our equity quality model, AAPL has consistently held a junk bias since 1983 (Exhibit 12). Initiating a dividend is positive for ascending to quality in our model, but it takes time for both earnings and dividends to register as stable (or stably growing). Moreover, the high share base turnover is typically associated with a lower quality equity. Thus, AAPL is likely to continue to exhibit lower quality bias for the near-to-medium term. Indeed, AAPL has not traded like an appreciably higher quality equity since its dividend announcement. In fact, it has traded off in the recent risk-off market more like a low- than a high-quality stock.” (emphasis hers)
Below the fold: Huberty’s Exhibit 12 and a couple of other charts that I could understand.
