Apple (AAPL) is the most underweight stock among active fund managers globally, according to UBS.
In a research note sent to clients on Monday, UBS said Apple is under-represented in the portfolios of active managers around the world according to latest data.
UBS calculates overweight and underweight trades by adding up the stock holdings of active managers, then comparing the percentage weighting of each stock to its weighting on its primary index.
For example, if company A’s market value represents 1% of the FTSE 100 but just 0.5% of a fund manager’s portfolio, the manager is underweight company A. In other words, they think it will underperform the wider market and therefore they make a smaller investment. But they still invest to hedge against the possibility their thesis is wrong.
The reverse is also true. If company A’s stock makes up 1.5% of the value of a manager’s portfolio, they are overweight on the business and expect its stock to outperform the wider market.
Apple has an “active weight” of -1.2%, according to UBS, showing that fund managers are collectively pessimistic about the possibility of the stock to outperform. US managers are particularly downbeat — Apple’s active weight among American active managers is -2.1%. This despite most analysts on Wall Street being bullish on the stock’s prospects.
As of August, there were no sell or underperform ratings for Apple stock among the 42 Apple ratings tracked by Yahoo Finance. The majority of analysts — 20 — gave Apple a “buy” rating.
Apple’s market capitalisation dropped below $1tn last Thursday after reporting disappointing Q4 iPhone sales numbers and giving disappointing guidance for the quarter ahead. The tech giant also announced it will stop breaking out device sales numbers in future.
“The concern, and increased uncertainty, post-results is based, in part, on the fact that
AAPL will no longer give unit results for iPhone, iPad, and Macs,” Macquarie Capital analyst Benjamin Schachter said in a note to clients on Friday. “Long-time AAPL watchers will clearly be disappointed by this and the assumption is that units are very likely to turn negative for the near-mid-term and that is why AAPL is making the disclosure change.”