AppleInsider Staff
Infamous hedge fund manager David Einhorn, who has previously butted heads with Apple, remains bullish on the iPhone maker despite its recent market plunge, giving the company a vote of confidence during a recent conference call.
"We continue to own Apple, which is traded down to a single-digit PE of a bear case earnings," said Einhorn, who runs the hedge fund Greenlight Capital. "We believe there is tremendous value in Apple's brand and growing global customer base that periodically buys new devices and increasingly buys additional services."
Einhorn's comments come amid a steep decline for Apple shares in the wake of what many view as a disappointing fiscal quarter. The company has shed tens of billions of dollars in market capitalization since revealing its second-quarter earnings, which were off nearly $8 billion year-over-year.
Despite his support of the company this week, Einhorn himself did cut his share in AAPL stock in the fourth quarter of 2015.
Still, Einhorn's position does not mirror that of activist investor Carl Icahn, who got out of the stock completely in recent weeks. Icahn, previously one of Apple's primary Wall Street cheerleaders, cited concerns about Apple's future in the tightening Chinese market.
Einhorn has had a difficult relationship with Apple, having publicly contested the company's growing cash hoard, claiming the practice hurt investors. He sued the company over the issue in 2013, but dropped the action less than a month later.
William Gallagher
Christine McKee
Stephen Silver
Charles Martin
Amber Neely
11 Comments
Very hard to know what guys like this really think -- they don't share opinions like this because they are trying to help others.
But I tend to agree Apple is severely undervalued. I also understand why people might think it's fairly valued. It's a very unusual company.
I think that in order to own AAPL stock, you have to:
(1) be in it for the long haul
(2) believe that this company is capable of repeatedly creating products (not just new classes of products, but also new iterations on existing products) that are sufficiently better than the competition to warrant higher profit margins
(3) believe that the company is capable of growing sales of those products
I meet all of these criteria, and so I continue to own the stock.
The reasons that I believe #2 and #3 are:
(a) I think that Apple's employees and structure are uniquely well suited to repeatedly developing "best-in-class" products and, occasionally, new product categories. I acknowledge that this is actually a radical belief and I understand why it is not widely shared among investors.
(b) Apple's *vast* financial resources mean that it can survive critical mistakes and that it can make very substantial investments in both capital and R&D to give its products uniquely valuable features. (this is not a radical belief -- the financial resources are obviously there).
(c) I think Apple has built a very powerful brand that means customers will be highly receptive to new products -- Apple does not need to worry about people failing to notice a great product. If Apple makes a great product, it will sell very well.
Hedge funds are inherently evil. Jony & Tim, a snergie from heaven.
Wall St. may just be the root of all evil. Would love if Apple were private.
"Einhorn's comments come amid a steep decline for Apple shares in the wake of what many view as a disappointing fiscal quarter. The company has shed tens of billions of dollars in market capitalization since revealing its second-quarter earnings, which were off nearly $8 billion year-over-year."
Earnings (profits) were not down 8 billion year over year. They are however down ~8 billion from last quarter which was the highest in all of worldwide corporate history.