Should Apple Start a Hedge Fund?

Having your stock hit the $500 per share is an excellent way to start the week surely but some think that Apple has a problem: too much money on hand but low yield.

The iconic technology/music /innovator/arbiter of cool company survived the loss of its leader this fall and saw its cash on hand swell to an estimated $100 billion. Although this is more than most hedge funds and asset managers have in assets under management combined, Apple seems content to be making only 1 percent returns on its cash.

Check out some key points from Reuter's Richard Leong:

With the mountain growing at an extraordinary rate - Apple's pile of money rose by more than $16 billion to $97.6 billion in the final quarter of last year, the weak returns may strengthen the arguments of investors who think it might be time Apple started returning some money to shareholders through a dividend.

Otherwise, given the phenomenal success of its iPhone in particular, Apple could at current rates of cash generation go through the $200 billion level sometime in 2013.

Apple said in its annual results filing that its cash and investments - worth $81.6 billion at that stage - earned just 0.77 percent in the fiscal year ended September 24, 2011. That was a hair above the 0.75 percent return earned the previous year and down from 1.43 percent in fiscal 2009 and 3.44 percent in 2008.

iFund anyone?

Should Apple hire a few quants and a high performance grid network and start their own hedge fund?

(Granted, Apple would have to hire some smart people who know quantitative theory and they would need a cloud to store and crunch the numbers. Where oh where would they ever find this?!)

Apple wouldn't be alone. Retailers are getting into the consumer banking space and it makes sense. In communities we media elites like to call the flyover states, Walmart plays a more positive role in people's lives than banks like Chase or Wells Fargo. And so far, Walmart has yet to ask for a bailout.

Why shouldn't Apple get involved in the hedge fund space? For starters, it's not their core competency. They make gadgets that radiate coolness, creativity and a sense of Zen peace of mind. This is perfect for laptops, phones, and tablets at the moment but it's not a good fit when client's money is at stake. Does anyone want a mellow if mildly arrogant portfolio manager?

Also, Apple might need the money for a rainy day if they hit a streak of weak products, patchy service and the rising fortunes of others (I'm looking at you, Google and HP). It could happen. America Online ruled the early days of the Web - or rather the World Wide Web - and it thought a merger with TimeWarner would make perfect sense. Instead it was a perfect debacle.

Further, hedge funds are secretive and stealthy but new rules like Dodd-Frank are forcing them into the light. Does Apple want that? This is a company that likes to sit on secrets and then spring them on the public in order to receive universal acclaim. This won't happen if the Dow starts to sink anytime soon.

Am I losing my mind? Have I drunk the Apple Kool-Aid? Tell me if you would invest in an Apple Hedge Fund.