Published in News

Fundholders slammed for Apple dependence

by on16 March 2015

Breaking investment rules

While some financial fund-holders are flogging their Apple shares, those who remain are increasingly getting slammed for not seeing the writing on the wall.

John Burnham, manager of the $136 million Burnham Fund, has a larger stake in Apple than any other diversified fund.

He insists that the outfit is doing everything right and it is still a cheap stock based on earnings and revenue.

However it is starting to look like that Apple devotion is starting to get others a little cross because it breaks the rules the company has set for its self-imposed risk-reducing guidelines that typically have them holding no more than 5 percent of their assets in any one company.

It is unusual for diversified funds like Burnham's to hold more than 10 percent of their portfolios in one company, because if it goes tits up, you take your whole fund with you.

Most fund managers are inclined to take profits when a stock hits 7 percent of a portfolio, yet there are few set mandates set down by fund firms.

"It's the world's greatest company. I just don't see any reason to sell it," Burnham said, adding that he thinks that the stock should trade above $200 a share. Shares of the company closed at $123.59 on Friday.

True his company has done well off the back of Apple investment, but it is still a high risk investment – particularly as the company is not coming up with anything new.

Other large holders of Apple have started to trim their positions. Mark Mulholland, whose Matthew 25 fund is classified as a non-diversified fund, has 15.3 percent of his portfolio's assets in Apple.

He expects to trim the position down to 10 percent of his portfolio, in part because the company's shares do not look as attractive on a valuation basis, he said.

"It's not a company under duress by any means, but it's not trading at as big as a discount as it was before," Mulholland said.


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