To temper the unpredictability of Apple shares, Nasdaq officials will rebalance the Nasdaq-100 index in May. By slashing the weight of Apple shares on the entire index by four eighths, which is two one quarter portions, or to go further, half of a whole, Nasdaq has performed a rebalancing. The action by Nasdaq is calibrated to discourage hedge funds from fiddling with Apple shares and encourage more scrupulous investors to throw down instead.
The Nasdaq to be redone with Apple going down
For the past few years, as Apple stock goes, so does the Nasdaq-100. Since the industry bottomed out in 2009, the Mac, iPhone and iPad have driven Apple shares skyward more than 250 percent. Since then, Apple’s stock has risen about another 150 percent to represent more than 20 percent of the total value of the Nasdaq-100 index. Apple stock is more than twice what it should be in the index, Nasdaq officials explained. On May 2, Nasdaq will rebalance anything. This will make, on the Nasdaq-100, Apple shares only 12 percent. The adjustment to repair for Apple realigns the ratio for the company's stock and outstanding shares with the way the Nasdaq-100 is calculated. This is a big change. It will change 81 other business positions. The change might make Apple rivals go up. They will be more prevalent. Microsoft will rise from 3.4 percent up to 8.3 percent. Other increases are expected in businesses. Intel will get to 4.2 percent, Google to 5.8 percent and Oracle ! to 6.7 percent.
All the Apple rumors change things
Any future manipulation by hedge fund traders that could hurt the Nasdaq-100 or short Apple will be prevented by the lower ratio of Apple shares. Recently, there was an instance where Apple stock swung in price due to Apple rumors, according to Jason Schwartz at Seeking Alpha. Apple was trading at $360 in February. At this time, a rumor that iPad 2 releases would be delayed until June because of "supply chain contacts" came out by Yuanta Securities. 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. The iPad announcement of being sold on March 10 was given by Steve Jobs right after that. Yuanta made lots of money off of it although investors felt really idiotic. This had a huge affect on the Nasdaq-100. It was a big deal.
No more of an Apple rumor influence
The Nasdaq rebalancing doesn’t take impact until next month, however money managers are already rebalancing their holdings. Apple stock went down on Tues from $337 to $341.19 with a $4.19 drop. There has already been less hedge fund able to use Apple to manipulate the industry. The iPhone delay rumors are, more than likely, not true. It will not affect the stock though since it is already going back up and is $15 below its high. Apple is anticipated to do better than expected in first quarter earnings while investors and traders can trade Apple shares.
Articles cited
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
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