Analyst: Smart Money Has Shied Away From Apple

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Source: http://www.flickr.com/photos/notahipster/4319949887/

Source: http://www.flickr.com/photos/notahipster/4319949887/

In general, the thirty largest shareholders in a large-cap technology company own between 30 and 50 percent of the stock. For example, according to data compiled by Morgan Stanley, the top thirty holders of Amazon.com Inc. (NASDAQ:AMZN) stock have held an average of 43.8 percent of total shares since 2009, when the firm began polling for ownership data. For the same period, the number is 32.2 percent for Microsoft Corp. (NASDAQ:MSFT), 44.6 percent for Google Inc. (NASDAQ:GOOG), and 36 percent for Apple Inc. (NASDAQ:AAPL).

The data can be useful to market watchers interested in understanding the level of institutional interest in a sector and for certain stocks within that sector. That is, market watchers can follow the so-called “smart money,” money invested by those with expert knowledge, as opposed to “dumb money.”

Google’s relatively high institutional ownership — at 84.2 percent as of the end of 2013 — suggests a high level of interest among professional investors and traders. In theory, these investors wouldn’t hold the stock if they didn’t believe it would perform well in the future, making their ownership a vote of confidence in the company. This idea is supported by Morgan Stanley data that show that at the end of 2013, the top thirty holders of Google stock owned an above-average share of total stock, at 44.5 percent. Moreover, the data show that on average, the portfolios of the top thirty holders are overweight Google relative to Google’s weight in the S&P 500.

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