More Retail Investors In Apple Than Ever: TD

Monday, 6 May 2013 | 12:15 PM ET
Tracking Retail Investor Moves
Monday, 6 May 2013 | 12:15 PM ET
Nicole Sherrod, TD Ameritrade, says more retail investors own Apple than ever before.

Retail investors loaded up on Apple last month as the stock plummeted to its lowest levels of the year and the company doubled its capital return program. So much so that the stock now has more ownership than ever in the history of TD Ameritrade, which tracks the largest pool of retail investors.

The general thinking on Wall Street has been that retail is the so-called dumb money and so one would think the stock garnered the most retail interest as it hit an all- time high of $705 last year. But that wasn't the case.

"The retail investor studies a lot on the Buffett principle, and they think it's a great company trading at a good price," said Nicole Sherrod, managing director of TD Ameritrade's Trader Group.

Apple rebounded almost 20 percent from its low of $385 last month as investors ignored weak iPhone sales and cheered the company's expanded plans to give back $100 billion in the form of share buybacks and dividends. The company also issued $17 billion in debt to fund that capital return.

Ironically, it was hedge funds and mutual funds that felt the most pain from Apple's selloff from its record high in September. More than 800 hedge funds and mutual funds counted the stock among their top 10 holdings at the end of the third quarter last year, according to data from InsiderScore.com.

Apple May 'Get Its Mojo Back': Josh Brown
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To fund their purchases of Apple and other value plays, retail investors sold high flyers such as Home Depot and McDonald's, according to TD. They bought basic materials stocks and the SPDR Gold Trust(GLD), along with the beaten-down iPad maker.

(Read More: How Apple Could 'Get Its Mojo Back')

"They were strong net buyers on down days and strong net sellers on up days" in April, said TD's Sherrod.

Overall, the retail investor remained very constructive on the markets at the end of April, with the electronic broker's proprietary IMX Index posting its fifth-highest reading in its 3-year history.

TD Ameritrade has 6 million funded accounts from which it pulls this data. Its monthly IMX measure uses a complex formula of those investors which completed at least one trade and weights more heavily active investors that use leverage.

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