Nervous analysts have worried for years that the stellar stock prices of technology giants Apple Inc and Google Inc could tumble back to earth.

Now some top hedge fund managers like Steve Mandel and Lee Ainslie appear to be acting on those concerns.

Mandel's Lone Pine Capital and Ainslie's Maverick Capital cut their stakes in both Apple and Google in the fourth quarter. And they were far from alone, as a bevy of other top managers also trimmed, according to a Thomson Reuters survey of filings of the Smart Money 30, some of the largest stock-picking equity hedge funds.

Apple's stock price has doubled in the past 18 months as the iPhone and iPad have set the pace in the battleground for mobile computing. Google has doubled over 24 months as it has tightened its grip on the Web search market.

But a host of hungry rivals are now chasing Apple's iPad hard, including Hewlett-Packard, Motorola and Research in Motion, while a question mark hangs over the health of Apple Chief Executive Steve Jobs.

Meanwhile, Google faces its own challenges to Web supremacy from social-oriented sites like Facebook, Twitter and Groupon.

Apple is a company that has to come up with hit after hit after hit, every 12 to 18 months, said Patrick Becker Jr at Becker Capital Management. But once you do the iPhone on Verizon, what's the next thing past this? Apple's five-year growth rate has been 58 percent on earnings -- that's got to slow going forward.

Google is at an uncertain transition point, said Bryan Keane, an equity analyst for the Alpine Mutual Funds. The ad market is maturing and the mobile business is only a small part of it at this time. From a hedge fund perspective, it may not look as interesting.

APPLE'S LAST BITE?

Both Apple and Google's price-to-earnings valuations ticked up toward the end of last quarter and are higher than rivals such as Microsoft Corp (MSFT.O) and IBM.

But at around 15 times and 17 times estimated earnings for the next 12 months, respectively, Apple and Google are still well below historical averages. Taking into account the billions of dollars on their balance sheets, the stocks look even cheaper, several fund managers said.

Apple is a very cheap stock at a very cheap multiple with an extremely high growth rate, said Mike Binger, a fund manager at Thrivent Financial. I see this company growing 20 percent-plus, top and bottom line, at least for the intermediate term.

Wall Street is estimating a 51 percent increase in Apple's profit per share this fiscal year, but only a 14 percent increase for the year after, ending in September 2012.

By that time, Apple may have exhausted its penetration into the consumer marker and will face price competition from a host of rivals to its iPhone and iPad, said Becker.

Hedge funds selling Apple in the fourth quarter may also have anticipated the announcement in mid-January that Jobs, the talismanic CEO, would take indefinite leave for health reasons.

Short sellers have targeted the stock in the wake of the news. Short interest positions on Apple are up 64 percent since mid-January, according to Nasdaq, though they represent a puny 1.2 percent of free float shares outstanding.

A lively Jobs allayed some concerns on Wednesday as he presented the company's new iPad. But uncertainty remains.

There are some added concerns surrounding Steve Jobs from a health perspective, said Keane. You might have seen some people taking some profits.

BIG-NAME SELLERS

Alongside Lone Pine and Maverick, sellers of Apple in the fourth quarter included Chase Coleman's Tiger Global Management, Domenic Ferrante's Brookside Capital, and John Griffin's Blue Ridge Capital, according to regulatory filings.

Eminence Capital was the biggest seller of Google shares, while Brookside and Lone Pine completely sold off their holdings in the Internet company.

The law of large numbers means it will be hard for Google to post stunning growth in future, which makes faster-growing companies more attractive investments for hedge funds, said Keane at Alpine.

Just getting to the size Google has gotten to and becoming a more mature company means there are other names in technology that are growing more rapidly, such as VMware or Salesforce.com, he said.

The market is still waiting for incoming Google CEO Larry Page to put his leadership stamp on the company he co-founded 13 years ago.

Short positions in Google are up 16 percent this year, but account for just 1.4 percent of free float shares outstanding.

Both Apple and Google shares are likely to take a knock this year, said Channing Smith, co-manager of the Capital Advisors Growth Fund, if only as the broader market runs out of steam.

We would not be be surprised to see a near-term correction for the overall market, Smith said. Bullish investor sentiment is in the nosebleed section at this point. Apple and Google have had enormous runs; it could just be a simple profit-taking exercise.

But the underlying businesses for both companies look strong, Smith maintained.

The end of last year was not a bad place for short-term investors like hedge funds to sell Apple, said Thrivent's Binger. If they owned it for the whole year of 2010, they made a fantastic profit on it, so why not take some profits?

(Editing by Aaron Pressman and John Wallace)

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