Apple Is a Hedge Fund That Makes Phones

This is a fascinating article in today’s Wall Street Journal about how Apple is, for all intents and purposes, a highly levered hedge fund, thanks to its wholly owned Braeburn Capital subsidiary which accounts for 70% of the book value of Apple’s assets.

Quoting from this article,

“Similar shadow hedge funds abound within S&P 500 industrial companies. Most disclose less information than Apple about their activities… in 2012 these corporations managed a combined portfolio of $1.6 trillion of nonoperating financial assets. Of this amount, almost 40% is held in risky financial assets, such as corporate bonds, mortgage-backed securities, auction-rate securities and equities.”

The (gated) Journal of Finance article upon which this WSJ op-ed is based is available at https://onlinelibrary.wiley.com/doi/abs/10.1111/jofi.12490.

Big companies need to disclose more about their investments.
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