Institutional ownership of AAPL inches up

  • Posted: 08 February 2009 08:07 AM

    Pardon me if these are a dumb questions, but I’m new at this.

    According to MSN Money, institutional ownership of AAPL stood at 67.02% as of Feb. 6. A snapshot taken two weeks earlier, on Jan. 23, showed it at 66.46%. That’s a small (0.8%) but measurably increase.

    Over the same two weeks, Apple shares rose nearly 13%.

    You guys are veteran Apple watchers. Is this cause and effect? Is buying by the institutional investors what’s driving up the stock?

    Second dumb question: is there a site that tracks changes in the level of institutional ownership over time, so I don’t have to rely on a couple of random screen grabs?

         
  • Posted: 08 February 2009 08:10 AM #1

    Philiped…there are NO dumb questions!

         
  • Posted: 08 February 2009 09:03 AM #2

    philiped - 08 February 2009 12:07 PM

    Pardon me if these are a dumb questions, but I’m new at this.

    According to MSN Money, institutional ownership of AAPL stood at 67.02% as of Feb. 6. A snapshot taken two weeks earlier, on Jan. 23, showed it at 66.46%. That’s a small (0.8%) but measurably increase.

    Over the same two weeks, Apple shares rose nearly 13%.

    You guys are veteran Apple watchers. Is this cause and effect? Is buying by the institutional investors what’s driving up the stock?

    Second dumb question: is there a site that tracks changes in the level of institutional ownership over time, so I don’t have to rely on a couple of random screen grabs?

    Re: first question cannot say but a good sign for sure. It would be interesting to know the percentage of Inst trade went into the market at the same time…
    as to the second ?  yes the NASDAQ site has that info.. sorry I have not got the link. btw your work is excellent, thanks

         
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    Posted: 08 February 2009 11:09 AM #3

    It might be something different.  Individual ownership is on the decline.

         
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    Posted: 08 February 2009 11:37 AM #4

    Most institutional owners tend to move with the herd so a stock with large institutional ownership is a victim of this herd mentality.  They follow a playbook of sector rotation which Eric Landstrom has posted in this forum several times.  Jim Cramer wrote several chapters on it in his book Real Money which is about the only part of the book which I feel is worthwhile.  With Apple having better then 2/3rd of their stock in institutional accounts the price won’t move much until there is a rotation into technology.

         
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    Posted: 08 February 2009 11:50 AM #5

    Philip, I’ve noticed the same thing.

    This link gives the current info,
    http://www.nasdaq.com/asp/holdings.asp?symbol=AAPL&selected=AAPL&FormType=Institutional

    I don’t have any that gives historical views.

         
  • Posted: 08 February 2009 11:56 AM #6

    Ownership by insiders and institutions certainly influences price moves. Look at FSLR for example. With only a fraction of the shares trading during a day compared with AAPL, FSLR can rise/fall from five to ten dollars daily due to the scarcity of shares to trade. The competition for the few available shares makes trades more dramatic. You really notice this in the PM, when a thousand shares or less can move the stock up or down by amounts that AAPL takes all week to achieve. When move big holders step back into AAPL, we’ll see more dramatic moves (hopefully upward).

         
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    Posted: 08 February 2009 01:48 PM #7

    There are no site that show institutional interest over time.  I’ve been monitoring the info provided by NASDAQ regularly.  Institutional interest has been inching up since Oct last year.  One caveat:  Info provided by NASDAQ can be as late as three months.  The point by pats is correct, once institutional interest is more than 66%, price won’t move up drastically because of more institutions coming in.  Btw, hedge funds are not considered as institutions in the NASDAQ computation.  Also, there seem to be a minimum % that it won’t decline below, possibly because of index funds.

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  • Posted: 08 February 2009 02:54 PM #8

    philiped - 08 February 2009 12:07 PM

    Pardon me if these are a dumb questions, but I’m new at this.

    According to MSN Money, institutional ownership of AAPL stood at 67.02% as of Feb. 6. A snapshot taken two weeks earlier, on Jan. 23, showed it at 66.46%. That’s a small (0.8%) but measurably increase.

    Over the same two weeks, Apple shares rose nearly 13%.

    You guys are veteran Apple watchers. Is this cause and effect? Is buying by the institutional investors what’s driving up the stock?

    ped, it could be a number of things including but not limited to:

    Continuing institutional interest at a time of lower retail demand for equities

    Institutions looking for “safe havens” for required ratios of equity investments

    Apple had an impressive December quarter compared to the industry and publicly-traded enterprises in general. Apple will be an attractive holding for mutual funds and other institutions as we head to the end of the quarter and for “window dressing” for quarterly reports for shareholders and stakeholders. In other words, the institutions will want winners on their list of reported holdings.

    Management’s forward guidance was a bit better than many of us expected and because of the challenging economy the company should perform better than most big caps in an otherwise dismal March quarter. No matter what’s done in Washington, it will have little to no effect on the economy for the March quarter and Apple

    Because of the increasing percentage of non-GAAP revenue and earnings(revenue and earnings that will be recognized under GAAP rules in future quarters) Apple’s near-term future results become easier to predict and forecast. This may provide institutional investors with more confidence in holding the stock.

    Back to the question of whether or not this increase in institutional ownership is the direct cause of an increase in the share value, one can not reliably provide an answer without looking for corroborative data. For example, during the recent share price rebound was there a corresponding increase in reported daily trading volume? Has there been a recent incidence of short coverage (another factor in share price activity) due to traders betting against the stock but having to come in and cover their positions to avoid losses on the share price rise?

    The share price increase and increase in institutional ownership may be coincidental. However, I surmise without looking at additional data points or metrics an increase in institutional ownership would in part (due to increasing share demand from institutions) be responsible for an increase in share value. An increase in institutional holding is usually a bullish sign.

    Please remember, similar to GOOG, Apple is a “high beta” equity. It tends to outperform or have an exaggerated increase in share price relative to the market as prices are rising and tends to underperform or have an exaggerated move to the downside when market prices are falling.

    I expect Apple to perform better than the overall market as prices rebound over the next several quarters.

    The stock market is a fairly accurate leading economic indicator and tends to reflect the performance of the economy a few quarters ahead of a general turn in reported activity whereas employment numbers are often a lagging economic indicator with the worst of the waves of layoffs and contractions in employment occurring after the economy has experienced a trough. In other words layoffs and employment contractions are an outcome of results whereas share prices tend to discount reported activity in favor of data points that suggest a pending improvement in economic performance. The market will reflect anticipated economic growth long before that growth impacts the corporate bottom line.

    In short, an increase in institutional ownership can be a bullish sign, but corroborating data is needed before drawing empirical conclusions.

         
  • Posted: 08 February 2009 03:03 PM #9

    Thanks all for your learned commentary, which has served once again to remind me how little I know. I’m going to have to put some more time into this.

    Meanwhile, I’ve chosen the easier route and used the recent run-up in AAPL to take a pot shot at Mike Abramsky of RBC Capital.

    http://apple20.blogs.fortune.cnn.com/2009/02/08/mike-abramskys-bad-apple-advice/

    No reply so far to my e-mail request for comment.

    UPDATE: Abramsky got back to me. He’s sticking with “underperform” and $70 per share.

    [ Edited: 08 February 2009 06:47 PM by philiped ]      
  • Posted: 08 February 2009 06:43 PM #10

    Great article on Abramsky! It really did merit this look because my jaw really did drop when I read his comments and ratings. It’s all quite interesting when you see on the analyst comparison chart Mike was in ‘the green’ on iPhone, iPod, and Mac sales numbers, but really low balled (like most “real” analysts) on the earnings.

    For some history on institutional ownership, I have reports (all the same source) that say:
    Nov 2007 at 70%,
    May 2008 at 68%
    Jan 2008 at 67%

    It may be difficult to compare across sources, but I think you’re onto something that is having a tangible effect.

    [ Edited: 08 February 2009 07:41 PM by cranium ]      
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    Posted: 08 February 2009 06:53 PM #11

    It would be a great sign if the funds were returning to AAPL in a big way (though I personally need another panic drop to buy in again rolleyes ).  My major misgiving about the current rally is the relatively low volumes.  I wonder if the volumes would be higher if the funds were back in earnest.

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  • Posted: 08 February 2009 11:44 PM #12

    Wow. Abramsky still sticking to his $70 target even with Apple at $100! It would be interesting to know if he’s looking for a general market breakdown or just thinks that general consumer demand is going to cause this kind of fall for Apple. I do think unit sales will be very depressed this quarter, but don’t see a 70 unless that’s coupled with the S&P at 600. If that’s true, get me a bucket!

         
  • Posted: 09 February 2009 11:18 AM #13

    Abramsky works for RBC which has serious investments in RIM and I believe one of the top dogs at RBC sits on Rim’s board. Conflict of interest anyone?

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    Posted: 09 February 2009 11:45 AM #14

    rattyuk - 09 February 2009 03:18 PM

    Abramsky works for RBC which has serious investments in RIM and I believe one of the top dogs at RBC sits on Rim’s board. Conflict of interest anyone?

    Barbara Stymiest, the COO for RBC is also on the board of directors for RIM
    http://investing.businessweek.com/businessweek/research/stocks/people/person.asp?personId=8279227&capId=109809&previousCapId=399960&previousTitle=Research In Motion Ltd.

         
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    Posted: 09 February 2009 11:46 AM #15

    DawnTreader - 08 February 2009 06:54 PM

    ... The stock market is a fairly accurate leading economic indicator and tends to reflect the performance of the economy a few quarters ahead of a general turn in reported activity whereas employment numbers are often a lagging economic indicator with the worst of the waves of layoffs and contractions in employment occurring after the economy has experienced a trough. In other words layoffs and employment contractions are an outcome of results whereas share prices tend to discount reported activity in favor of data points that suggest a pending improvement in economic performance. The market will reflect anticipated economic growth long before that growth impacts the corporate bottom line ...

    Well known fact yet many AFBers talk as if market is a lagging indicator.

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