Shares in Apple have taken another tumble after billionaire activist investor Carl Icahn announced he had sold his entire stake in the company.
Citing worries over the ways in which China’s “dictatorship” may continue to impact profits at the world’s most valuable public company, Icahn told CNBC on Thursday that Apple was no longer a “no-brainer” investment.
According to his most recent regulatory filing, Icahn had possessed some 45.8 million shares in Apple until February – worth an estimated $4.8 billion. That said, Icahn made clear he had been reducing his holding in the company just before share prices started to slide earlier this year amid concerns the global smartphone market had become oversaturated.
On Thursday, Icahn revealed that his next regulatory filing would reveal he was “out of the stock.” He also told CNBC‘s Scott Wapner he had made around $2 billion by dumping the rest of his shares in Apple.
“We no longer have a position in Apple,” he said. “Tim Cook did a great job. I called him this morning to tell him that, and he was a little sorry, obviously. But I told him it’s a great company.”
Icahn went on to add he thought that Apple’s management team was top-notch and that his infamously active investment style could not impact the company’s sliding fortunes.
That said, Icahn did nudge Apple’s management on at least one big decision in recent years. After disclosing his stake in 2013, Icahn convinced CEO Tim Cook to return a lot of Apple’s cash pile to investors by increasing company dividends and its share buyback program. The move helped Apple’s shares rally by some 28 percent across 2014.
In 2015, Icahn continued to be a huge cheerleader for Apple, repeatedly calling his investment in the company a “no brainer.”
In an open letter to Tim Cook in May of last year, Icahn claimed that shares in Apple were worth approximately 90 percent more than they had been trading for – meaning he believed the company’s true market capitalization to be about $1.4 trillion.
As late as September 2015, Icahn was even telling reporters he was considering purchasing more stock in Apple.
Yet after two mediocre quarters, Icahn said he ultimately chose to dump the stock based largely upon the company’s lukewarm performance in Chinese markets.
“In Apple today, as opposed to six months or a year ago, in this one, there’s no need for activism because I think they have a great management,” he said. “But you worry a little bit, maybe more than a little, about China’s attitude.”
Despite admitting he had earned a huge profit from his three-year stake in Apple, Icahn argued that the company’s shares were nosediving for a reason, but he refused to rule out reinvesting in the future.
“We have this huge profit, so by definition it’s not the no-brainer it was,” he said. “I hope one day to get back into it.”
Icahn’s announcement sent shares down by three percent on Thursday, with Apple closing at $94.83. Added to a major investor exodus that had taken place at the start of the week, that decline leaves the company down some 10 percent.
On Tuesday, Apple posted its first-ever decline in iPhone sales – spearheading the company’s first revenue drop in 13 years. The news sent shares tumbling by around eight percent on Tuesday, wiping an estimated $46 billion from Apple’s overall market capitalization.
In a conference call with investors, CEO Tim Cook blamed the sales drop on hugely unfavorable macroeconomic conditions, and he added that he was still optimistic about how the rest of 2016 will continue to unfold for Apple.
“Our team executed extremely well in the face of strong macroeconomic headwinds,” he said. “We are very happy with the continued strong growth in revenue from Services, thanks to the incredible strength of the Apple ecosystem and our growing base of over one billion active devices.”
[Photo by Neilson Barnard/Getty Images for New York Times]