It’s always reassuring for shareholders when a billionaire activist investor takes a large stake in a stock. However, three big-name activist investors have been selling Apple (AAPL), Canadian Pacific Railway (CP) and Legg Mason (LM) stock in recent weeks.
Here’s a look at who has been selling and why.
When one of the most recognizable names on Wall Street sells his full stake in the most heavily-owned stock in the world, people take notice. Carl Icahn has been all over the news in the past week after he told CNBC that he has unloaded his massive stake in AAPL.
Icahn famously called his AAPL investment a “no-brainer” back in 2013 when it was trading at a split-adjusted $67 per share. Less than a year ago, Icahn bravely slapped a $240 price target on AAPL. What changed? China.
According to Icahn himself, uncertainly surrounding government cooperation in China scared him away from AAPL. Icahn said the Chinese government can “come in and make it difficult for Apple to sell there.”
Apple reported a 26% year-over-year revenue decline in its Greater China segment in Q1.
Icahn noted that if AAPL can demonstrate consistent growth in China and a working relationship with the Chinese government, he would consider buying AAPL stock again in the future.
Legg Mason (LM)
Billionaire activist investor and founding partner of Trian Fund Management Nelson Peltz announced on April 12 that he has sold Trian’s nearly 10% stake in LM after six-years. Peltz’s took his original stake in LM back in 2009 in the aftermath of the Financial Crisis. The company has since replaced its CEO, improved the performance of its mutual funds and made a number of strategic acquisitions.
Since Peltz’s original LM position was disclosed in October 2009, the stock has significantly underperformed the market. In the time Peltz owned the stock it gained only about 6.0%.
After trading as high as $57.88 in early 2015, the stock sold off hard in the past year and now hovers in the $30 range.
Peltz stepped down from the LM board in 2014 and has now sold “substantially all” of Trian’s LM shares.
Canadian Pacific Railway (CP)
It’s been a rough year for activist investor Bill Ackman. Earlier this year, Ackman and his Pershing Square Capital endured a $1 billion paper loss on Valeant Pharmaceuticals (VRX) in a single day.
At least Ackman is also locking in some gains from CP this year. Ackman acquired his initial 14.2% stake in CP back in 2011. In recent weeks, Pershing disclosed that it has sold 4.1 million shares of CP at around $148, a more than 150% gain.
In recent years, Ackman has pushed hard for consolidation in the railroad industry. While serving on the company’s board, Ackman oversaw the ousting of CEO Fred Green and a failed hostile takeover bid for Norfolk Southern Corp. (NSC).
Ackman may finally be giving up on his railroad consolidation idea. However, his VRX losses are now so steep that recent sales of CP and Mondelez (MDLZ) could be more about shoring up cash than any change to the bull theses for the two companies.
Disclosure: As of this writing, Wayne Duggan had no positions in any of the stocks mentioned.