Why you are forced to own Apple By Lawrence Lewitinn

One stock has become the “must-own” name for hedge funds: Apple.

According to Goldman Sachs, nearly 20 percent of hedge funds surveyed own shares in the tech giant, and it is the biggest position in one out of every eight funds.

For one portfolio manager, Apple is a required stock for any fund going long the market.

“Apple has changed in terms of how it is used by hedge funds,” said Kevin Caron of Washington Crossing Advisors.

“It has become such a large company that if you have a bullish point of view on the market, you are forced to own Apple,” he said.

Caron notes that the tech giant is now about 4 percent of the S&P 500 and is more than twice the value of the second-largest publicly traded company, Exxon Mobil.

“It has become a beta play on the market,” said Caron, whose firm’s parent company, Stifel Nicolaus, makes a market in Apple. “If you’re running a hedge fund and you feel good about the market, I think you have to own Apple.”

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And based on the chart work of one prominent technician, those hedge funds owning Apple shares will see more upside ahead in the position.

“The stock looks bullish technically, still,” said Mark Newton, chief technical analyst at Greywolf Execution Partners. “I still expect about a 10 percent increase between now and this spring, getting up to $145 a share before we see any sort of pullback.”

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Newton reached that target by projecting the likely length of the stock’s current rally, based on Apple’s long run from 2008 to 2012.

“It has gotten a little bit stretched, but there is really no sign of exhaustion,” he said. “It’s difficult not to own it.”

Culled from yahoo finance