Susan Dziubinski: I’m Susan Dziubinski with Morningstar. Today, we’re talking about one popular stock that top fund managers have been selling this year. Who are these top managers? They’re active managers running funds that land in one of Morningstar’s US large-cap categories. Their funds earn Morningstar Medalist Ratings of Bronze or higher, and their portfolios include 50 stocks or less. We think these managers are adept stock-pickers, and we often examine their portfolio buys and sells for investment ideas.
The Surprising Stock That Top Fund Managers Are Selling
So, what popular stock did nearly half of these managers pull back in this year? Apple.
To be fair, Apple remains a top holding among these managers, but they have been taking money off the table. Morningstar thinks Apple is a terrific company. It’s carved out a wide economic moat with its tight hardware, software, and services ecosystem that leads to high customer-switching costs. And the company’s ability to develop updated and brand-new technology internally is exceptional. Lastly, Apple’s balance sheet is robust, its cash generation is impressive, and its dividend and buyback program routinely sends the company’s free cash flow to shareholders.
Read Morningstar’s full company report on Apple.
But Apple is facing headwinds today. For starters, iPhone growth has slowed. And as primarily a hardware company, Apple faces material risk from tariffs, both on profitability and longer-term demand. So far, Apple’s core devices have been exempt from US tariffs, and most US iPhone units are imported from India rather than from China. And while Morningstar expects Apple to earn an exemption from US tariffs for the long term, there’s still a good deal of uncertainty around that stock today. Lastly, Apple stock is no bargain from Morningstar’s perspective. We think the stock is worth USD 200 per share.
For more stock ideas, visit Morningstar.com.
Morningstar analyst William Kerwin provided the research behind this segment.
Watch Top Fund Managers Are Buying These 3 Cheap Stocks for more from Susan Dziubinski.
The author or authors do not own shares in any securities mentioned in this article. Find out about Morningstar’s editorial policies.
