…The company’s share price has risen by 83% in the past year, and by almost 50% so far in 2012. Apple is now easily the largest company in the world by market capitalisation, at some $565 billion. It looms over Exxon Mobil, which is worth a mere $408 billion. Since the start of this year it has added $187 billion to its valuation, roughly equivalent to the entire market caps of companies like Procter & Gamble, Johnson & Johnson and Wells Fargo. Apple is larger than the American retail sector combined.
…Around a third of all hedge funds own it, including big names like SAC Capital and Greenlight. Some have made very big bets. Citadel’s $5.1 billion stake in Apple (as of December 31st) accounted for around 12% of its equity portfolio. Many hedge funds that have done well in the past year owe much to this single position.
The stock’s gains this year have not only boosted the spirits of shareholders but also brightened the whole equity market. Apple is responsible for more than 10% of the S&P 500’s rise this year (see chart 2), and for 39% of the NASDAQ 100’s gains. No other stock has ever grown to have such a significant impact on an index so quickly, says Howard Silverblatt of Standard & Poor’s, a ratings agency.
…Some wonder whether the stock is headed into bubble territory. Apple’s p/e is much lower than that of stocks in the dot-com bubble; America Online’s was a ridiculous 154 in 1999. But contrarian thinking is thin on the ground. There is very little short interest in Apple. “Call” options, which give the right to buy Apple stock, are much more expensive than “puts”, which give the right to sell the stock, says Mark Sebastian of Option Pit, a consultancy. Of the 54 analysts who track Apple stock, only one has a sell rating, according to Bloomberg. Robert Shiller, a Yale economist and author of “Irrational Exuberance”, reckons that the “emotional attachment” to the Apple story and “wild” enthusiasm about its stock are reminiscent of a bubble. “You could play the bubble, because it might not be over yet, but I wouldn’t put money in Apple stock,” he says. (» more)