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Time To Sell Apple Inc.? Watching Hedge Fund Managers For A Clue

In mid-September Apple shares dipped below its August 13th, 2013 level. Icahn took the opportunity and bought more shares. Sentiment improved again following Icahn’s “no-brainer” remarks regarding Apple after the September purchases. However, markets ignored Icahn’s strong bullish remarks last January after a somewhat disappointing earnings call and Apple Inc. (NASDAQ:AAPL) shares dipped again below the $500 level. Carl Icahn took advantage of the opportunity one more time and bet another $500 million on Apple. He hasn’t made any significant changes to his holdings since the end of the first quarter of 2014.

Now, with the benefit of hindsight, we know that Icahn probably started buying Apple shares after it started rebounding from its sub $400 level. He was maybe a month late. On the other hand, Jim Roumell was 7 months early in buying Apple shares. He managed to lower his average cost because he was confident enough to add to his holdings. “We knew each time we were paying less and less for the actual business because the balance sheet stays the same. We want things that we can easily and comfortably add to if they go 25% against us” he explained.

Today, Carl Icahn is still bullish on Apple. He thinks the stock has a long way to go and is worth at least $200 if not more.

Jim Roumell is contrarian and he is aware of the fact that Apple is “now a popular security again”. He says Apple may still be undervalued but they seem to execute and the stock can no longer be described as out of favor. He acknowledges that they just came off of a phenomenal iPhone 6 sales period and the company has a very strong ecosystem. However, he thinks Apple Inc (NASDAQ:AAPL) is still a hardware company and he would value it at 11 or 12 times earnings plus cash. The company is currently trading near these values and there is no margin of safety for investors. He says “it could still work but the easy money is made. We don’t pretend to know enough about trying to predict future sales cycles on Apple. At the price we bought it we just didn’t think we have to get a whole lot right.”

Roumell recently sold his Apple shares. He was early buying Apple shares, so it is likely that he is a little bit early selling Apple shares. Apple was the most popular stock among hedge funds at the end of the third quarter (see the complete rankings). In 10 days we will find out what other hedge funds are doing with their Apple holdings. Other notable hedge fund managers with large Apple positions to watch are David Einhorn and Philippe Laffont. We think Apple will maintain its popularity and this isn’t the right time to sell Apple shares.