The heads of major hedge funds are so bullish on shares of Apple that they wish they could buy more, but doing so would put them at too great a risk with less diversification.
The conundrum for hedge fund managers was spotlighted on Monday by Reuters. which noted that 174 funds hold large stakes of Apple in their diversified portfolios. Typically, funds have self-imposed guidelines that prevent them from holding 5 percent of their stake in any single company.
Some have a large stake, like the $136 million Burnham Fund, which has 15 percent of its money allocated in Apple. And John Burnham, the fund's manager, would like to buy even more, but doing so would put too much of his stock's performance based on a single company.
Still, he and others think shares of Apple remain greatly undervalued, even though they are
up more than 12 percent so far this year.
Among the most bullish on Apple is activist investor Carl Icahn, who oversees diversified holding company Icahn Enterprises L.P. Last month, Icahn issued a note saying he believes shares of AAPL should be trading at $216 today, based on their current revenue stream and cash position.
For years now, Apple has been a popular choice among hedge fund investors, many of whom have gained considerably from Apple's recent performance on the market. Over the last two years, post-split prices on Apple have more than doubled, though AAPL is currently trading about $10 lower than its all-time high of $133.60.
Last November, one major hedge fund manager said that he believes Apple could achieve a trillion-dollar market cap. Currently, the market values Apple at about $723 billion, making it by far the largest company in the world by capitalization.