Nasdaq, a stock exchange, has indicated that its index known as the Nasdaq-100 will be rebalanced to more accurately reflect the ratio to which Apple shares relate to the other 99 businesses accompanying it on said index. Apple stock, in its rapid growth, has begun to weigh too heavily on the index. Nasdaq rebalancing cuts the ratio of Apple stock to the total value of the Nasdaq-100 by 50 percent. Hedge funds won’t be as tempted to punk other investors with Apple rumors and those other investors may be more open to betting on Apple stock with the expectation that the payoff in the long term is ensured because unpredictability risk is diminished currently. Source for this article – Nasdaq rebalancing reduces hedge fund manipulation of Apple stock by MoneyBlogNewz.
The Nasdaq to be remade with Apple dropping
An increase in Apple stock has also been an increase in the Nasdaq-100 in the last few years. There has been over a 250 percent increase in Apple shares since the 2009 industry crash due to the Mac, iPhone and iPad. Apple stock went up since then another 150 percent. That is more than 20 percent of the Nasdaq-100 total value. In accordance with Nasdaq officials, Apple stock has ballooned to more than twice the weight it should have on the index. Apple shares will be less than 12 percent of Nasdaq-100 shares after the May 2 Nasdaq rebalancing. The adjustment to correct for Apple realigns the ratio for the company's stock and outstanding shares with the way the Nasdaq-100 is calculated. The change also lessens weighting for 81 many businesses. Some Apple rivals will gain. Microsoft will rise from 3.4 percent up to 8.3 percent. Oracle will rise to 6.7 percent, Google will rise to 5.8 percent, and Intel will climb to 4.2 percent.
All the Apple rumors change things
Due to the lower Apple share ratio, the Nasdaq-100 will be protected. Any manipulation by hedge fund traders will be stopped. Recently, there was an instance where Apple stock swung in price because of Apple rumors, in accordance with Jason Schwartz at Seeking Alpha. In February, when Apple was trading at $360, hedge fund Yuanta Securities floated a rumor depending on “supply chain contacts” that the iPad 2 would be postponed until June. The rumors spread very quickly. Soon, Apple shares were shorted by Yuanta Securities to make money. It only took 2 days to lower Apple stock. It had a $20 decrease. Shortly afterward, Steve Jobs, who was given six weeks to live by bloggers, declared the iPad would go on sale March 10. Investors who should have known better felt duped, and Yuanta padded its returns. The Nasdaq-100 was affected due to this.
Can't even see the impact anymore
It will be another month before the Nasdaq rebalancing occurs. Still, money managers are rebalancing what they have. A drop occurred on Tues in Apple stock during this. It caused a $4.19 decrease from $337 to $341.19. The ability of hedge funds to manipulate the market using Apple already has been diminished. Analysts don’t expect the latest iPhone delay rumors (which would freeze the iPhone market and hurt Apple if they were true) to work because Apple stock remains about $15 below its high and is trending upward again. A window has been opened for average investors and traders to get into Apple shares and the company is expected to exceed expectations again when it states first quarter earnings this month.
Information from
Fortune
tech.fortune.cnn.com/2011/04/05/a-good-day-to-buy-aapl/
Mac Observer
macobserver.com/tmo/article/nasdaq-100_to_cut_apples_index_share_nearly_in_half/
MSN Money
money.msn.com/market-news/default.aspx?feat=e52a3c86-3053-48e5-91eb-970765febdcc
Seeking Alpha
seekingalpha.com/article/260887-hedge-funds-bloggers-and-the-origin-of-apple-rumors
No comments:
Post a Comment