David Einhorn: Hedge Funds Are Underweight Apple

David Einhorn still loves Apple Inc.

In an investor letter, Einhorn’s Greenlight Capital once again defends its Apple investment, reiterating Apple is “one of the most misunderstood stocks in the market.”

Einhorn notes some critics discredit Apple’s stock by saying too many hedge funds own its shares, deeming the ownership base fickle. But Einhorn claims hedge funds hold less than 5% of Apple’s outstanding shares, and the average fund has less than 2% of its equity assets in Apple vs Apple’s 4% weighting in the S&P 500.

“Hedge funds are actually underweight Apple,” the letter says.

The comments followed Einhorn’s remarks at the Ira Sohn Conference earlier this month that investors “assume that Apple is a hardware company” and its fate hinges on the success of a particular product. But he said Apple is a software company that can get customers hooked once it gets them to use its products.

Apple shares are up 1.2% at $578.90. The stock is up 43% this year, although it has dropped about 3% over the last two months of trading.

Here’s the full letter: