Growth funds dumping Apple stock as iPhone sales seen sagging; value-managers moving in

Fri Jan 15, 2016 4:58pm EST
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By David Randall

NEW YORK (Reuters) - Major U.S. growth mutual funds have been among the largest sellers of Apple Inc (AAPL.O: Quote) shares over the past six months, fueling speculation that the company’s days of supercharged growth have come to an end.

Amid concerns that iPhone sales may be set to drop, the $77.3 billion American Funds Capital World Growth & Income Fund CWGIX.O has sold all of its 1.7 million Apple shares since the end of June, according to Lipper data. The $9.3 billion Hartford Capital Appreciation Fund ITHAX.O sold 1.4 million shares over the same period, reducing its position by 91 percent.

The selling of Apple stock by growth-oriented managers, who seek higher returns from fast-expanding companies, pushes Apple further toward being a so-called value stock – more appealing for its balance sheet or cash than its growth prospects.

Investors see Wall Street's expectations of fewer phone sales this year as a reflection of a maturing U.S. smartphone market and the economic slowdown in China, where Apple has been deriving most of its growth.

They were jolted when Taiwan-based iPhone assembler Hon Hai Precision Industry Co – commonly known as Foxconn – said its revenue fell by a fifth in December, one sign that iPhone demand could be slowing.

The massive manufacturer also plans to cut worker hours over China's week-long Lunar New Year holiday in February, a period when it previously had often paid overtime, a source familiar with the matter told Reuters.

Wall Street analysts expect Apple to grow revenue by just 4 to 7 percent in the current fiscal year ending next September – down from 28 percent the year before, according to Thomson Reuters data.

The slowdown concerns have helped to drive Apple's shares down almost 29 percent to $95.98 late on Friday morning, from last April's peak of $134.54.   Continued...

An iPhone 6 Plus is pictured on sale at an Apple Store in Los Angeles, California in this September 25, 2015 file photo. REUTERS/Jonathan Alcorn/Files