Long-time Apple bull Matthew 25 fund starts trimming position

Long-time Apple bull Matthew 25 fund starts trimming position

Dado Ruvic

NEW YORK (Reuters) - A portfolio manager whose outsized Apple Inc position helped him beat 99 percent of his peers over the last five years has started to trim his stake out of concerns that the iPhone maker's stock no longer looks as attractive.

Mark Mulholland, who manages the $849 million Matthew 25 fund, has 15.3 percent of his portfolio in Apple, the second-largest weighting of any actively managed fund tracked by Lipper. Mulholland expects to trim that to about 10 percent of his portfolio, he said in an interview.

"It's not a company under duress by any means, but it's not trading at as big as a discount as it was before," Mulholland said.

Shares of Apple are up 64 percent over the last 12 months, including a 12.8 percent jump so far this year. The company trades at a price-to-earnings ratio of 16.7, up from its 52-week low of 12.5.

Even at 10 percent of Matthew 25's portfolio, Apple will remain a major holding for the fund. Most actively managed funds tend to hold less than 6 percent in any one position in order to mitigate risks.

Yet Mulholland argues that taking concentrated positions is the only way for investors to outperform broad benchmarks over time.

His portfolio of 30 stocks, which includes positions in outdoor retailer Cabela's Inc and FedEx Corp, has returned an average of 21.2 percent a year over the last five years, according to Morningstar. That performance is 6.5 percentage points greater than the S&P 500 over the same time.

Mulholland still considers Apple undervalued overall, he said. The funds from trimming his Apple position will be reallocated or held as cash for any fund redemptions, he added.

The Matthew 25 fund is up 1.7 percent so far this year, or about 2 percentage points more than the S&P 500.

(Reporting by David Randall; Editing by Richard Chang)