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Apple (Nasdaq: AAPL ) has been on fire lately -- up more than 400% over the past five years -- so it's no surprise that there's plenty of retail and institutional interest in the company. Indeed, last year Apple was among the top 30 most-owned stocks by investment clubs, as measured by the folks at Better Investing. If retail investors were high on the stock, it got me to thinking: What's the consensus sentiment view on Apple?
Turns out, the view is mostly bullish. Let's have a look at a few of the key sentiment drivers.
1. Analyst opinion
Analysts have a favorable opinion of Apple. Data from Yahoo! Finance captures their collective feeling:
Number of Analysts
A total of 50 analysts have a "strong buy" or "buy" rating, with a mere three "holds" and a lone anomaly of a "sell." That's a stupendously bullish outlook from analysts.
2. Insider buying
Next we'll look at insider buying and selling. This picture isn't as rosy for Apple.
Over the past year, Apple insiders have sold $252 million worth of their company stock. During the same time period, insiders didn't buy a single share of stock. (Data from Form4Oracle.)
Although $252 million of net insider selling isn't all that meaningful relative to Apple's $325 billion market cap, and even though insiders sell stock for a whole host of reasons -- to pay for a house or tuition, to diversify assets, and so forth -- it would be nice to see some insider buying. For Apple, we'll classify insider buying/selling sentiment as bearish.
3. Guru buying
Next, we'll look at "guru" ownership of the stock. According to GuruFocus, in the quarter ended Dec. 31, four investing gurus were buying Apple and two were selling. Among the buyers were George Soros, Wally Weitz, and Daniel Loeb; Steve Mandel and Ken Heebner (known for moving in and out of positions quickly) were sellers. In the previous quarter, six gurus were buying, versus four sellers. (Adding to the positive sentiment, Apple is also a recommendation in our Motley Fool Stock Advisor flagship newsletter service.)
Though the guru picture is mixed, more gurus were buying than selling, so we'll call the trend "somewhat bullish" for Apple.
4. Retail-investor community sentiment
For retail-investor community sentiment, I turn to Motley Fool CAPS, our proprietary stock-rating system. CAPS generates ratings on a one- to five-star scale, with five stars as the highest ranking, indicating that the Fool community believes in a stock's future. Apple has a neutral three-star rating.
5. Short sellers
Next we'll look at whether short sellers are circling the stock. There are 10 million Apple shares sold short, according to Capital IQ. As a percentage of shares outstanding, that's a short interest of 1.1%. That's not very high -- for instance, it's nowhere near the 13.3% short interest for struggling bookseller Barnes & Noble. For determining sentiment, we'll classify the lack of short sellers as bullish.
6. Does Buffett own it?
This is the "cherry on top" test, and in Apple's case, it's a no: Berkshire Hathaway does not own shares of Apple. (Not much of a surprise, given Warren Buffett's famous aversion to technology stocks.)
Adding it up
Analysts are extremely positive on Apple. Although less so, the guru trend is also bullish, and short sellers aren't targeting the company in any significant way. The CAPS retail-investor community is neutral on Apple, but the insider sell/buy picture is a bearish indicator. Berkshire doesn't own shares of Apple, either. Add it all up, and Apple comes out with a consensus sentiment of "mostly bullish."
Of course, you can't base an investment philosophy on who likes or dislikes the stock you own, and a consensus bullish opinion can sometimes be a scary thing. Quoting Buffett: "A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful."
The purpose of this series of articles isn't to make a definitive buy-or-sell call on Apple. Rather, by looking at a stock's sentiment, the goal is to help you place your own opinion of it in a broader context.
One final thing: If you want to keep tabs on Apple's movements, and for more analysis on the company, make sure you add it to your Watchlist.