Why Apple is the most unloved stock in the world, according to fund managers

Apple, the world’s most valuable company, is now also the most unloved stock among active fund managers — at least relative to its size.

That’s according to a note from quant analysts at UBS, the Swiss bank. They regularly analyse the holdings of over 37,000 mutual funds to find the most “underweight” and “overweight” stocks — the ones fund managers are most like to own less of, or more of, than the stock’s position in the index would suggest.

The UBS note, published on 5 October, showed the average active fund manager held about 2.6% of their fund in Apple at the start of the month — whereas the stock makes up about 3.9% of the MSCI All-Countries World Index. That made it the most “underweight” stock in the world.

Even so, some managers think this is not the moment of maximum pessimism on the stock.

Said Tazi, a portfolio manager at Syz Private Banking, said: “The market goes from loving the stock to hating the stock and is now in between. The pendulum this year has been loving the stock, which is up more than 50% since the beginning of the year.”

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Tazi said his fund was now neutral on Apple, having previously been overweight on the stock.

“It is not cheap anymore but it is not overvalued either. However, people have to bear in mind sentiment can shift pretty quickly and strongly on names such as Apple that everyone is looking at very carefully,” he said.

The UBS analysis provides further evidence that fund managers are worried about getting caught up in an overheated US tech market.

A survey of fund managers by Bank of America published last month found managers were “paranoid” about the US tech sector, which was described as the most crowded trade of all time.

The survey found that a tech bubble was the second most-cited tail risk after a Covid-19 second wave.

“We have been overweight on the sector for several years but we have favoured companies such as Alphabet and Mastercard, not so much in software as a service [SaaS] — which is the part of the tech sector that has done fantastically well this year," Tazi said, citing companies such as video conference provider Zoom and cloud software company Salesforce.

“We think some of those names are really overvalued because in spite of the fact you have a structural shift into SaaS that is here to stay — at the end of the day the end users are still suffering from the economic slowdown and there should be repercussions even for those high flying stocks,” he said.

Apple came out on top in the UBS research, after the analysts summed up all holdings in the funds they looked at by their dollar value, using Factset institutional ownership data. They then calculated the weights of the stocks, and compared it to the index, UBS analyst Paul Winter wrote in the note. #investment#

Reprinted from Marketwatch，the copyright all reserved by the original author.