Hedge funds preferring discount retailers over high end brands

Press Release   •   Feb 15, 2013 10:43 GMT

Hedge fund heavyweights from Leon Cooperman's Omega Advisors to Barry Rosenstein's Jana Partners threw in the towel on Apple Inc in the fourth quarter, while other managers found discount retailers Dollar General Corp and Dollar Tree Inc attractive, regulatory filings showed on Thursday.

Some of the biggest hedge funds that helped make Apple Inc a stock market darling lost faith and dumped their stakes in the fourth quarter, fuelling the massive drop in the iPhone maker's share price.

Noted stock pickers including Leon Cooperman, Eric Mindich and Thomas Steyer unloaded billions of dollars of Apple shares between September 30 and December 31, according to disclosure documents.

Shares of Apple rose to an all-time high of $705.07 on September 21 but ended 2012 down more than 24% from that peak as investors worried about increasing competition and declining profit margins.

Consumer- and retail-related stocks, particularly discount stores, appear to have been the flavour of the fourth quarter.

Patrick McCormack's $2 billion Tiger Consumer Management LLC took a new, 2.15 million-share stake in discount retailer Dollar Tree, while Farallon Capital Management LLC bought 4.3 million shares of Dollar General.

Maverick Capital Management also increased its position in Family Dollar Stores, to 4.2 million shares from 2.8 million shares, during the fourth quarter. Family Dollar shares were losers in January, down 11.4%.

The economic crisis appears to be taking its toll on the US, with hedge funds preferring to invest in discount stores as opposed to high end retailers, such as Apple.

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