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Hedge Fund Giants Sell Apple, So What?

This article is more than 8 years old.

To say that Apple shares have been a huge disappointment for the last year would be a major understatement. Actually, Apple shares have not done anything for a lot longer period but suffice it to say that they have disappointed for a long time despite continued record revenues and profitability, probably unmatched in corporate history.

13F filings from the biggest hedge funds in the world which were made public last night after the close of trading showed that one of Apple's biggest and most vocal shareholders, Carl Icahn, had sold 7 million shares of Apple in the December quarter, leaving him with 45.8 million shares.

(A 13F is a quarterly filing that requires institutional investors with over $100 million in qualifying assets to list their recent investment holdings.This form must be filed with the SEC within 45 days of the end of each quarter)

Other 13F filings showed the David Einhorn's Greenlight Capital, Adage Capital, and Blue Ridge Capital all reduced their stakes in Apple.

On the other hand, Tiger Global Management initiated a new position in Apple with holdings of 10.6 million shares as of December 31.

So, what does all this mean to you and I?  Actually, it means a hill of beans to you and I. Going into the end of the year and even into last week, it was common knowledge on the Street that companies like Apple and the FANG quartet were the being used to fund investors' other longs and shorts. In other words, they were/are the ATM's du jour. Big deal!

We do know that Carl Icahn's publicly traded vehicle, Icahn Enterprises, LP. is currently trading close to three year lows as a result of Uncle Carl's losing bets in the energy sector.  Icahn is down a cool $1 billion just in Chesapeake Energy alone. Another energy bet of Icahn's, Cheniere Energy is now almost 60% below where his average price is, giving him another billion dollar loss. Transocean and Freeport -McMoran are two other massive money losing bets for Carl Icahn as well.

So, maybe he sold off the 7 million shares to offset the losses in the rest of his portfolio. Maybe he did it to add to his money losing positions. Whatever the rationale, it has no bearing on you and me.

David Einhorn also had a lousy 2015 with his losing bets on Micron, SunEdison and Consol Energy. Einhorn's hedge fund, Greenlight Capital, was down around 20% for 2015, so maybe his motivation for reducing his stake in Apple was the same as Carl Icahn.

What is actually more troubling is the continued selling from Apple management, while on the other hand, they are raising more money via debt offerings to buy back even more shares. Pretty good gig, huh?

Buy back shares with shareholder's money on one hand while on the other, sell their own shares as fast as they vest.

Heads I win, tails you lose, anyone?

(Long Apple, short weekly calls)