OK, Jeff Gundlach. You were right. Absolutely right.
The bond guru has maintained bearish sentiment on Apple Inc. (NASDAQ:AAPL) for the better part of a year. Last May at the Ira Sohn Conference in New York, Gundlach went as far as to recommend shorting Apple Inc. (NASDAQ:AAPL) while going long natural gas, a trade that he said had “monster legs.” Let’s look at the price of United States Natural Gas Fund, LP (NYSEMKT:UNG) compared to the Mac maker to see how “monster” this trade turned out.
Over the next four months, Apple Inc. (NASDAQ:AAPL) would continue rallying and top out at $705, nearly 30% higher than when Gundlach recommended shorting it, while natural gas was up less than 10%. Following Apple’s peak, shares have cratered and are now down 22% from his initial call, although natural gas has given up most of its gains as well and is now only up 2.6%. Not so sure I would call that “monster,” even though his prediction that Apple would eventually fall has come to fruition.
In November, Gundlach appeared on CNBC at a time when Apple Inc. (NASDAQ:AAPL) was trading near $550. The fund manager then expressed his belief that Apple has lost its main product innovator and that it would soon try to pass off “tooty-fruity” iPad colors as innovative. His crystal ball told him that Apple would soon hit $425, which was $125 below prices at the time and represented a market cap loss of nearly $120 billion. I panned Gundlach at the time, saying his price target was absurd since it would put Apple’s P/E firmly into single-digit territory of 9.6 (or 6.7 excluding cash), and that Apple’s cash would comprise 30% of its value.