Big tech names like Microsoft, Apple and Amazon don’t get enough love from active portfolio managers. But that could be a good thing for their stocks and investors going forward, according to Morgan Stanley. “Second quarter ownership data makes us incrementally more positive about the leading technology platforms; MSFT, AAPL, AMZN and GOOGL & META, as these stocks are still undervalued relative to their weight in the S&P 500,” analyst Erik Woodring wrote. a note to customers in Tuesday. Technology stocks have collapsed this year as investors evade growth areas in the face of rising inflation and higher interest rates. That pushed the tech-heavy Nasdaq Composite and the S&P 500’s information technology sector about 24% and 27% from their 52-week highs, respectively. A review of recent Morgan Stanley 13F data appears to support that trend, showing that active managers own fewer large technology stocks compared to their S&P 500 weights. However, the bank said that this could turn out to be positive in the future. “A quantitative analysis of this historical data shows that, on average, after adjusting for market capitalization and earnings beats, there is a statistically significant association between low active ownership relative to the S&P 500 and future stock performance,” Woodring wrote. “This indicates that stocks, on average, appear to experience greater technical pull when active ownership is much lower than the market, and vice versa.” Microsoft was the most underpowered of the large-cap technology stocks, followed by Apple, Nvidia, Amazon and Alphabet, the data shows. On the other hand, Intuit reigned as the stock with the most shares, with its weighting against the S&P 500 higher than in the previous quarter and its historic levels. At the end of the second quarter, the spread between holdings of major technology between actively managed portfolios and their S&P 500 weights reached negative 69 basis points. However, that gap lagged the rest of the tech and their S&P 500 weightings on average, the bank found. Even though Apple’s spread narrowed in the quarter, it still had the largest gap after Microsoft between the major tech stocks. “For reference, the gap between Apple’s institutional ownership and the S&P 500 weighting over the past 3 years has averaged 101 bps versus 125 bps currently,” Woodring wrote. “We think this largely reflects investor concerns about deteriorating consumer electronics demand.” Shares of the iPhone maker are down about 11% this year and are more than 13% away from their highs. — CNBC’s Michael Bloom contributed to the report.
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