Billionaire investor Carl Icahn (CNBC/NBCU Photo Bank via Getty Images)
One year ago, Carl Icahn thought Apple could do no wrong. Now he's selling.
The hedge fund titan sold 7 million Apple shares in the last quarter, worth about $700 million at recent prices. That's only 13% of Icahn's prior stake, and he still owns more than $4.4 billion in the iPhone maker. But it's the first time Icahn has sold since he built up this large position in Apple in mid-2014.
The sale could reflect Icahn's need for cash--his publicly-traded Icahn Enterprises LP is down 45% in the last year. But it also could be an admission that he was wrong about Apple.
A year ago this week, Icahn was perhaps the most vocal cheerleader for Apple. After the company pushed past $700 billion market capitalization, he called for it to hit $1 trillion. My colleague Steve Schaefer explained Icahn's argument at the time:
Given its rapid growth, Apple should be fetching a premium to the market, not trading at a “totally irrational” discount, Icahn’s argument goes, and with his prescribed 20x multiple, shares are worth a stunning $216 per share, which would render a market valuation of nearly $1.3 trillion.
That isn’t a pie-in-the-sky future projection based on a bunch of successful new products like the Apple Watch and a television either, according to Icahn. “This is not a future price target,” he writes. “$216 is what we think Apple is worth TODAY.” If a TV product comes through the pipeline in the next few years, they even think their multiple rationale is conservative.
Icahn may have thought Apple should be worth more than $200 per share, but the rest of Wall Street certainly didn't. By May, Icahn was going even higher: targeting $240 per share for Apple. In fact, Icahn's letters represent Apple's peak market value. In the last year, Apple shares fell 23%, from around $130 per share to under $100.
Apple stock has been hammered recently as growth in the iPhone business slowed. Google even briefly passed it as the world's most valuable company. Even after selling, Icahn still has plenty invested in seeing that trend turn around.
