Is Apple's Braeburn The World's Largest Hedge Fund?

Oct 2 2012 | 1:11pm ET

What is the world's largest hedge fund? According to one measure, it isn't Bridgewater Capital or Man Group, or any firm that manages money for outside investors, at all.

Instead, it's a subsidiary of Apple Inc., according to Zero Hedge. Braeburn Capital, with Apple's $117.2 billion in assets to manage, tops all comers. And it's growing, Zero Hedge reports, at a rate of about $15 billion per quarter, as the world's largest publicly-listed corporation by market capitalization continues to bring in the bucks selling iPads, iPhones and the other must-have electronic gadgets of the 21st century.

Braeburn is based at an office park in Reno, Nev., which helps shield Apple's billions from California taxes. Whether or not it qualifies as a hedge fund is, of course, open to question: It manages no outside money and it isn't registered with the Securities and Exchange Commission. What's not open to question is the size of Braeburn's cash horde.

Zero Hedge complains there's little information available about Braeburn, other than the bland description that it is "the asset management arm of Apple Inc." that "invests in the public equity markets." The firm is led by principals Gary Wipfler, Gene Levoff and Michael Schapiro, chief investment officer Steve Johnson and portfolio manager Ted Mulvaney. Wipfler is Apple's treasurer.

While Braeburn doesn't make any public disclosures, Forbes points out that it isn't quite as opaque as Zero Hedge claims, for the simple reason that Apple does make public disclosures. And its full-year accounts as of last September show some $14 billion in U.S. agency debt, $10 billion in U.S. Treasuries, $2 billion in money-market funds and $1 billion in mutual funds, among many other investments. Some $54 billion is held offshore.

Forbes also calls into question whether it makes sense to call Braeburn a hedge fund at all, noting that the same accounts include the following line: "The Company had no fair value hedges in 2011, 2010 and 2009."


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