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Apple Inc. NASDAQ:AAPL is getting sold off today, despite strong prospects for Q4 earnings it seems some one is selling.

Economist and Hedge Fund Manager Shayne Heffernan of www.livetradingnews.com takes a look at why investors are selling AAPL.

That some one is institutions, and the selling is nothing to do with AAPL, it is a response to the possibility of a global recession in 2013.

AAPL, for whatever reason has been allowed to become the most over weighted index component in history, the amount of the Wall St indices made up by AAPL stock is ridiculous and may have been left to give investors a false sense of security in terms of the total market, that aside it would appear over the last few weeks institutions are exiting AAPL on the eve of record earnings, why would they do that? Simple, if we are facing a down turn then funds would expect to reduce their index exposure and prepare for cash demands from redemptions.

In case you doubt that theory, take a look at the data, 279 institutions have been reducing their AAPL holdings.

In September, single-manager hedge funds in Morningstar’s Hedge Fund Database saw outflows $1.1 billion. The global macro category experienced the heaviest redemptions among all single-manager categories, bleeding $546 million. The debt arbitrage strategies and long-only debt strategies had inflows of $147 million and $194 million, respectively.

Today’s Citibank news would have frightened institutions around the world, Citigroup Inc, said it is cutting 11,000 jobs worldwide, about 4 percent of its staff, to save as much as $1.1 billion a year in expenses.

The move will initially result in pre-tax charges of $1 billion against fourth-quarter earnings, the bank said on Wednesday.

The cuts are Chief Executive Michael Corbat’s first major steps to reorganize the company since he took the reins in October after directors pushed out his predecessor, Vikram Pandit.

“We have identified areas and products where our scale does not provide for meaningful returns,” Corbat said in a statement issued by the company. “We will further increase our operating efficiency by reducing excess capacity and expenses.”

The job cuts are part of a reorganization that will reduce annual revenues by “less than $300 million,” the statement said.

Interested in Investing in Asia? Hedge Funds, Real Estate, Trading

Linda Johnson,
Business Development Director – Private Client Group,
Heffernan Capital Management
Sales@Heffcap.com

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