updated 12:37 pm EST, Wed February 26, 2014
Suggests firms are underestimating potential
Institutional investment in Apple stock is at a five-year low, notes Morgan Stanley analyst Katy Huberty. She notes that based on data since 2009, the top 30 shareholders of large-cap companies normally own between 30 and 50 percent of a company's shares. Whereas corporations like Amazon and Google are approaching records for their levels of institutional ownership, Apple is at its lowest top-30 ownership level since 2009, sitting at 30 percent. That compares with a five-year average of 36 percent and a peak of 40 percent, also in 2009.
"[Institutional investors] hold less concentrated positions in Apple than in the past with the top 30 holders allocating 2.2% of their fund to AAPL, compared to a high of 4.1% in the last five years and Apple's current 2.9% weighting in the S&P 500," Huberty writes in a new memo. "By comparison, institutional funds are overweight [on] all other large cap technology stocks in our analysis."
The current institutional ownership average among S&P 500 business is 83 percent, and growing by a rate of 80 basis points per year. The trend is said to be influenced by people selling off individual stocks and moving into mutual funds. Huberty adds, though, that she believes institutions are underestimating Apple's capacity to grow revenues and reach into new markets. As an example, she predicts that the iWatch could reap as much as $17.5 billion from existing iPhone owners in its first year, and sell between 32 and 58 million units overall during that period. The analyst also speculates that mobile payments and advertising services could be avenues for profit.