Hedge fund dumps Apple shares over fears of Chinese trade war

Posted:
in AAPL Investors
Billionaire David Einhorn's Greenlight Capital has disposed of all of its shares in Apple, due to fearing the potential retaliation from China against U.S. trade tariffs affecting imports, by imposing restrictions and other measures that could affect the iPhone producer in the country.




In a letter from the billionaire to investors seen by CNBC, Einhorn claims "We ultimately sold because our differentiated thesis from 2011 has become consensus." Einhorn also adds "We are somewhat worried about Chinese retaliation against America's trade policies."

The Greenlight Capital fund reduced its stake in Apple by 486,000 shares, approximately 77 percent of its holdings in the company, in the second quarter. On August 31, the fund sold the remaining shares at $228 apiece, offloading around $40 million in the process.

Greenlight first bought into Apple in May 2010, and so far its investment in the iPhone maker has earned its clients over $1 billion.

The share selloff ultimately didn't hurt Apple that much, as it recently enjoyed its highest stock price, touching $230 during trading on Tuesday. The share price did drop slightly after the Einhorn announcement, dropping down by 2.4 percent.

Einhorn's worry of Chinese interference in Apple's business stems from the ongoing trade war between the United States and China, with the Trump Administration hitting Chinese imports with import tariffs. In September, the U.S. applied $200 billion in new tariffs against a variety of goods from China, but so far the administration has tried to avoid placing fees on produce affecting Apple.

Three days after the $200 billion in import tariffs were applied, China retaliated by announcing $60 billion in tariffs against U.S. goods.

Apple CEO Tim Cook has vocally opposed the measures, calling trade "not a zero-sum game," and expressing optimism that the two countries will "sort this out and life will go on." Apple itself has condemned the tariffs and "other protectionist measures" in Securities and Exchange Commission filings, warning the tariff war could materially impact the company's finances.

Comments

  • Reply 1 of 15
    maestro64maestro64 Posts: 4,262member
    This is stupid, we already know Apple was not hit with the full forces of the tariffs, and China would only hurt themselves by some how going after Apple's business. Apple's production employees more people in China than any other US company. Going after Apple will just effect Apples over uses of Chinese manufacturing. Einhorn is try to manipulate the stock, drive it down before the numbers come out so he and buy low and ride it up again.
    edited October 5 bshankwatto_cobra
  • Reply 2 of 15
    Seems to me after they mis-prediceted the peak when they sold at $227 on Aug 31st because it kept going up to $232 they had to do something to try to crash the price or their clients would be annoyed at losing $3 million (486k * 1.33 * $5). The media will continue on the China FUD to bring the price back down 10% or so when all the firms can buy back.
    Renderdogwatto_cobra
  • Reply 3 of 15
    He's just selling the good stuff to pay for the bad. His hedge fund has been an unmitigated disaster: https://www.cnbc.com/2018/07/31/david-einhorns-greenlight-capital-says-fund-is-down-18percent-this-year-aft.html

    He got totally lucky with Apple because Cook and Co. ignored his utterly laughable investment advice (remember that proposal of his from a couple of years ago?).
    edited October 5 leavingthebiggSpamSandwichpscooter63RonnnieOwatto_cobrajony0
  • Reply 4 of 15
    When Warren Buffet divests is when I'll start worrying.
    leavingthebiggretrogustopscooter63RonnnieOwatto_cobrajony0
  • Reply 5 of 15
    He's just selling the good stuff to pay for the bad. His hedge fund has been an unmitigated disaster: https://www.cnbc.com/2018/07/31/david-einhorns-greenlight-capital-says-fund-is-down-18percent-this-year-aft.html
    And of course as everyone’s retirement savings go backwards, these assclowns get paid their handsome salaries...
    TomE
  • Reply 6 of 15
    dewmedewme Posts: 1,681member
    It’s very sad that Apple has been caught up in a wave of stupidity that it has no way of avoiding. All Apple can really do is to focus on what it does best. Apple is an innocent bystander in all of this foolishness. 
    pscooter63TomEwatto_cobra
  • Reply 7 of 15
    Everything he sells will be bought up immediately at these prices.

    Might also be worth mentioning he dumped his Twitter holdings. He's doing a lousy job, this guy.

    https://www.schaeffersresearch.com/content/news/2018/10/05/hedge-fund-cuts-twitter-apple-stakes
    edited October 5 watto_cobra
  • Reply 8 of 15
    When Warren Buffet divests is when I'll start worrying.
    Yeah, I’d trust Buffett over Einhorn any day—who wouldn’t? But having beat Buffett to the Apple party by about 14 years and enjoyed every minute of it, I guess I shouldn’t be too phased if he decides to leave before I do. 
    SpamSandwichTomEwatto_cobrajony0
  • Reply 9 of 15
    wood1208wood1208 Posts: 1,554member
    Einhorn is defending his decision but look at his track record for the last 5 years. We understand that if trade war,tariffs between USA-China prolongs than at some point it can spill over Apple's business. Based on history, China(communist) can take lot more pain than USA(democracy) and will bleed. For a long term. better to manufacture products out of China and rest of democratic world to unite and fight against China to stop it's predatory practices.
  • Reply 10 of 15
    Everything he sells will be bought up immediately at these prices.

    Might also be worth mentioning he dumped his Twitter holdings. He's doing a lousy job, this guy.

    https://www.schaeffersresearch.com/content/news/2018/10/05/hedge-fund-cuts-twitter-apple-stakes
    Not “will be bought up”, but “was bought up”. Never forget that there’s always someone else on the other side of the transaction. For a widely traded stock like Apple there is no need for a market maker to buy and temporarily hold shares.

    You can’t sell shares unless there’s someone else who thinks it’s a good idea to buy at that price.
    watto_cobrajony0
  • Reply 11 of 15
    SpamSandwichSpamSandwich Posts: 29,875member
    wood1208 said:
    Einhorn is defending his decision but look at his track record for the last 5 years. We understand that if trade war,tariffs between USA-China prolongs than at some point it can spill over Apple's business. Based on history, China(communist) can take lot more pain than USA(democracy) and will bleed. For a long term. better to manufacture products out of China and rest of democratic world to unite and fight against China to stop it's predatory practices.
    The PRC may think their people can take the pain and belt-tightening that could be coming, but most Chinese live in a completely different world today from even 10-15 years ago. China has massively transformed to a consumer culture with many modern amenities. There’s no way today’s Chinese citizen is ever going back to a life of subsistence living. If there is a major economic upheaval today, their people will revolt and overthrow their government, no question.
    watto_cobra
  • Reply 12 of 15
    wood1208 said:
    Einhorn is defending his decision but look at his track record for the last 5 years. We understand that if trade war,tariffs between USA-China prolongs than at some point it can spill over Apple's business. Based on history, China(communist) can take lot more pain than USA(democracy) and will bleed. For a long term. better to manufacture products out of China and rest of democratic world to unite and fight against China to stop it's predatory practices.
    The PRC may think their people can take the pain and belt-tightening that could be coming, but most Chinese live in a completely different world today from even 10-15 years ago. China has massively transformed to a consumer culture with many modern amenities. There’s no way today’s Chinese citizen is ever going back to a life of subsistence living. If there is a major economic upheaval today, their people will revolt and overthrow their government, no question.
    You are making an assumption that the commie cares about the people. As a Chinese, I can tell you they don’t. The commie will be happy to grab cash out of the people as long as they can remind in power.
  • Reply 13 of 15
    red oakred oak Posts: 614member
    Carl Icahn sold all of his Apple shares in April, 2018 for the same reason.   The stock price then was $165.   Based on my calculations,  Carl lost out on almost $3B in profits 

    Good luck David Einhorn! 


    https://www.theguardian.com/technology/2016/apr/29/billionaire-investor-carl-icahn-sells-entire-stake-in-apple


    edited October 6 watto_cobra
  • Reply 14 of 15
    red oak said:
    Carl Icahn sold all of his Apple shares in April, 2018 for the same reason.   The stock price then was $165.   Based on my calculations,  Carl lost out on almost $3B in profits 

    Good luck David Einhorn! 


    https://www.theguardian.com/technology/2016/apr/29/billionaire-investor-carl-icahn-sells-entire-stake-in-apple


    He'll need it!
    watto_cobra
  • Reply 15 of 15
    red oak said:
    Carl Icahn sold all of his Apple shares in April, 2018 for the same reason.   The stock price then was $165.   Based on my calculations,  Carl lost out on almost $3B in profits 

    Good luck David Einhorn! 


    https://www.theguardian.com/technology/2016/apr/29/billionaire-investor-carl-icahn-sells-entire-stake-in-apple


    Your trading idea is like an amateur. It is almost impossible to peg the top, pro  traders have an entry, a stop loss and targets at which they sell and move on other potentially more lucrative opportunities. His target was165 he sold and then probably made more money on other things.
    avon b7
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