A number of high-profile hedge fund honchos dumped chunks of shares in Apple Inc. (AAPL) at the end of 2015, but that doesn’t say anything about what you should do with your own holdings of AAPL stock.
Seriously.
In a series of regulatory filings late Tuesday, we learned that famed activist investor (and former corporate raider) Carl Icahn greatly pared his stake in Apple stock. So did David Einhorn’s Greenlight Capital and David Tepper’s Appaloosa Management.
Whenever three of the best known hedge fund guys make a move like this, it’s bound to be news. That’s especially true given AAPL stock’s well-documented struggles over the past three months, a period in which it’s lost almost 15%.
As we now know, these hedge funds added to the selling pressure in Apple stock in the fourth quarter. Here’s the rundown:
- Carl Icahn cut his stake 7 million shares, or about 13%, to 45.8 million shares from 52.8 million shares.
- David Einhorn reduced his position by almost half to 6.3 million shares from 11.7 million shares.
- David Tepper eased up on his holding to 1.26 million shares from 1.31 million shares.
Note that none of the above pulled out of Apple entirely.
AAPL Stock: Much Ado About Nothing
It’s also important for retail investors to remember that the selling of stock never tells you as much about a name as the buying does.
It’s the same with insider activity. Hedge funds can sell for any number of reasons. Portfolio rebalancing, profit taking, quantitative or technical analysis tipping points — those are just some of the reasons a fund might pare back its stake in any stock.
And let’s not forget that a lot of the most famous hedge fund machers are getting shellacked by the ongoing collapse of energy sector names.
Besides, it’s not like AAPL stock lost all its friends in Q4. Tiger Global Management initiated a billion-dollar position in the tech giant by buying 10.6 million shares.
So although it’s interesting in a financial-celebrity-news kind of way, it has no bearing on Apple stock’s prospects going forward.
In more interesting news on the Apple front, the company with more cash than it knows what to do with just sold about $12 billion worth of debt. The proceeds will be used to fund its massive share repurchase program.
Returning cash to shareholders doesn’t soothe investor concern over the state of iPhone sales, but it sure doesn’t hurt. The company bought back $37 billion in AAPL stock last year, according to S&P Capital IQ (some of which probably went to Icahn, Einhorn, et. al.) Apple also paid nearly $12 billion in dividends.
If you’re long AAPL stock, pay no attention to hedge funds selling shares. Apple might have some serious problems, but billionaires adjusting their stakes isn’t one of them.
As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.
