BOSTON — Some of the biggest hedge funds that helped make Apple Inc a stock market darling lost faith and dumped their stakes in the fourth quarter, fueling the massive drop in the iPhone maker’s share price.
Noted stock pickers including Leon Cooperman, Eric Mindich and Thomas Steyer unloaded billions of dollars of Apple shares between September 30 and December 31, according to disclosure documents filed on Thursday.
Apple Inc. (NASDAQ:AAPL) stock fell by 1.66% in day trading on Thursday as Bloomberg shed light on the fact that a larger iPad might not see the light of day commercially until the end of 2015. The stock shed points throughout the day based on a Deutsche Bank research note that maintained a $110 price target on the stock and claimed that the Apple Watch would have limited impact in the wearables market and Apple’s revenue and earnings over the next few years.
One of the frustrating things for shareholders is how readily companies give away stock. A huge company like Apple has been giving away huge amounts of stock (through stock options) even while adding tens of billions in cash to their stockpile.
Outstanding stock for Apple
While the folks at Apple Inc. appear outwardly glib in their dismissal of a shareholder lawsuit over the deployment of the tech giant’s US$137.1-billion cash reserves, the rest of corporate America should be getting an uneasy feeling. With so many companies holding near-record cash positions as protection in a post-financial crisis world, those fortresses could be making them vulnerable to attack.
One of the things that annoy me as an investor is how happy the executives are to grant themselves huge amount of pay in general and stock in particular. The love to giveaway huge amounts of stock to themselves and their buddies and then pretend that isn’t a cost.
Thankfully the GAAP rules changed a few years ago to require making the costs of stock giveaways show up on official earnings statements. Now, the companies love to trumpet non-GAAP earnings that exclude stock based compensation to employees.