QQQ Draws Big Bets Ahead Of Apple Earnings

Whenever Apple Inc. AAPL gets ready to report quarterly earnings, as the iPhone maker will do after Thursday's close, it pays for exchange traded funds to have substantial weights to the largest U.S. company by market capitalization.

Literally.

In advance of Apple earnings, traders often flock to ETFs with big weights to the stock, a theme that's being repeated this earnings season. Just look at the PowerShares QQQ QQQ, the Nasdaq-100 tracking ETF.

“Ahead of AAPL’s earnings tomorrow after the bell, we have seen substantial inflows (over $3 billion in) into QQQ (PowerShares QQQ), where the top individual weighting is of course Apple,” said Street One Financial Vice Paul Weisbruch in a note out Wednesday. “Apple stock itself has posted an impressive winning streak in the past several sessions, with a parabolic move higher from the mid $150s to present levels (closed at $169.04 yesterday) at an all-time high before earnings.”

Exact Statistics

The $57.2 billion QQQ allocates over 61 percent of its weight to the technology sector, nearly triple the ETF's second-largest sector exposure, which is consumer discretionary.

As of Oct. 31, Apple was QQQ's largest holding at a weight of 12.2 percent. That's more than 300 basis points than QQQ allocates to Microsoft Corporation MSFT, the ETF's second-largest holding.

Over just the past week, QQQ has seen inflows of $3.3 billion, according to PowerShares. That's more than six times the allocated to the second-best asset gatherer among PowerShares ETFs over the same period.

Great Expectations

Wall Street expects Apple to post quarterly earnings of $1.87 a share on revenue of $50.79 billion, up from $1.50 per share and revenues of $46.85 billion a year earlier.

“For the fiscal first quarter, encompassing the key holiday selling season, analysts estimate earnings per share of $3.77 and revenues of $85.31 billion,” as Benzinga reported Wednesday. “Meanwhile, Loup Ventures estimates December quarter revenues of $81.2 billion, iPhone unit shipments of 76.7 million, Service segment growth of 19 percent and gross margin of 38 percent.”

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