The Apple (AAPL) shareholder base is turning over from growth to value investors as growth fund managers begin to question the growth potential of this technology giant, even as the company has a solid brand and a long runway ahead in terms of superior capital returns, says William H. Mann III, Chief Investment Officer of Motley Fool Asset Management.
“If you think about your average growth investor or your average growth fund manager over the last five years, they’ve essentially been mandated to own Apple,” Mann said. “[Now] people who were momentum investors and growth investors have had to look at it and say, ‘OK, it’s a $700 billion company, how much bigger do I really think it’s going to be?’ For the first time in Apple history, the law of large numbers seems to have caught up with it a little bit.”
Mann says the shedding of AAPL at growth funds can be partly attributed to their investment cycles, where the growth portfolio managers have now decided Apple’s risk/reward no longer fits their bill. Mann says, however, this cyclical shift is exactly what’s driving value investors to the company.
“[Apple is] a wonderful company; their margins are strong, and their brand is amongst the best that has ever been created. We are not looking for it to be another 100-bagger. We are looking at it as a company, with the current prices, where the odds are it’s going to do quite well,” Mann said.
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