While I still think Apple (AAPL) has upside to $150 plus as the year unfolds, I trimmed positions across most Northlake client accounts this morning. Apple shares have performed very well this year as the company is seeing much better demand than many feared given the state of consumer spending around the world. As a result of a 50% increase in the share price in 2009, many client positions in Apple had risen to almost 4% of total portfolio values. Northlake closely monitors position sizes and usually cuts back near 4% to bring positions below 3%. This is a useful way to harvest gains or capture relative performance.
The bottom line on this Apple trim is that it is driven more by than position management than any change in my view of Apple’s business trends or long-term stock valuation.
In addition, with the market having crossed the 900 level on the S&P 500, completing a rally of 30% plus off the 2009 lows, I want to rebuild cash positions which were lowered in mid-March. I think early May is a logical time for the market to consolidate recent gains as news flow will dry up after this week. My plan is to reinvest recent cash proceeds and invest additional cash reserves if the market pulls back 5-8%. Of course, I am always on the lookout for individual buying opportunities that are not tied to the overall market trend.
Disclosure: AAPL is widely held by clients of Northlake Capital Management, LLC including in Steve Birenberg’s personal accounts.