Apple Tops List of Most Added Stocks by Mutual Funds in Q4, While Banks Top the List of Those Most Sold

Even as news surfaced that Apple (Nasdaq: AAPL) had been manipulating older iPhones to slow their performance, mutual funds were adding the stock to their portfolios more than any other stock. All told, 65 funds added shares and the total investment totaled over $1.8 billion in purchases.

Apple did move higher in the fourth quarter with most of the gains coming in October and then the stock consolidated in November and December. The stock is overbought based on the weekly stochastic readings and just slightly out of overbought territory based on the 10-week RSI.

From a fundamental perspective Apple is solid with a return on equity of 36.9 percent and a profit margin of 28 percent, but their earnings and sales growth are only average at 6.0 percent and 4.0 percent over the last three years. The very best fundamental companies are showing earnings and sales growth much higher than that. Apple is also somewhat expensive right now with a P/E ratio of 19.

Bank of America (NYSE: BAC) was the second most added stock as it was added by 57 stocks to the tune of $1.04 billion in purchases. Like Apple, BofA is solid fundamentally, but hasn’t had great earnings and sales growth. The return on equity is 6.9 percent, the profit margin is 26.9 percent, but the earnings growth is only 6.0 percent over the last three years and the sales growth is only 1.0 percent over that same time period. Ironically, BofA was the most sold stock in the fourth quarter with 93 funds selling it for a net loss of 36 funds.

Like Apple, BofA is overbought based on its weekly stochastic readings and its 10-week RSI. It is also overbought on its daily and monthly charts. The stock was up in the fourth quarter and gained ground in all three months of the quarter to close out the year.

The second most sold stock in the fourth quarter was JP Morgan Chase (NYSE: JPM) with 91 funds selling it. It was also added by 56 funds, but that is still a net decline in fund ownership of 35. Like BAC and AAPL, JPM is overbought on its weekly chart, but then again most stocks are overbought right now. The fundamentals are similar to BAC with EPS growth of 3.0 percent and sales growth of 2.0 percent over the last three years. The ROE is 9.9 percent and the profit margin is 33.5 percent.

I was a little surprised to see two big banks as the top two most sold stocks in the fourth quarter. As I explained in a recent article, banks typically do well in a rising interest rate environment.

Both JPM and BAC will report earnings within the next week.

About Rick Pendergraft

Rick has been studying, trading, analyzing and writing about the investment markets for over 30 years. He has worked for some of the largest financial publishers in the world and he has been quoted in the Wall Street Journal, USA Today, the New York Times and the Washington Post. In addition, he has been interviewed on Bloomberg, CNBC and Fox Business News. Rick’s analysis process includes fundamental, sentiment and technical analysis. Rick started college as an education major, wanting to teach economics, but eventually changed to majoring in Economics and received a Bachelor of Science in Economics from Wright State University. His desire to inform and educate people is at the heart of his writing.

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