This afternoon's declines have many investors scratching their heads as to what caused the sell-off. While cautious comments regarding BIDU and the tech sector as well as the hawkish comments from a member of the ECB are being attributed to the intraday declines, a look at some intraday stock charts suggests that either somebody went to sell more than they intended or they really needed to get out. Two intraday charts that stood out to us were AAPL and RIMM. Both stocks sold off between 8-10% in a matter of minutes before bouncing back.
We looked to see whether any hedge funds or mutual funds were in the list of top shareholders for both companies. The table below highlights the nine hedge funds and mutual funds that have large holdings in both RIMM and AAPL. For example, Wellington is the largest holder (among hedge funds and mutual funds) of RIMM (3.93% of shares outstanding) and AAPL (2.28%).
It could just as easily have been stop loss orders kicking in, thanks to huge numbers of inexperienced private investors who are in both these stocks. AAPL fell off a cliff as soon as it was down $5 off its highs of the day, with volume jumping when it was down $10, which sounds like stop loss orders placed by people who don't understand that as a stock's price grows, the percentage represented by a one point move shrinks.
Posted by: J | October 12, 2007 at 09:08 AM