Major US growth mutual funds have been among the largest sellers of Apple 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 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 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 US 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 per cent 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.
“The upside from the phone segment, which is what has carried them for several years, is becoming more limited,” said Tony Arsta, a co-portfolio manager of the growth-oriented Motley Fool Great America Fund, which sold all of its Apple shares – 2 percent of its assets – over the past six months. “They were able to juice it by introducing a bigger screen, but all the easy decisions have played out.” Apple did not respond to requests for comment for this article.
