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Ican flip flop

This I can't believe. Carl Icahn't get outsized returns by talking it up, which leads him to changing his mind after a year and a half. Less than a year ago, on the 18th of May, Carl Icahn wrote: "After reflecting upon Apple's tremendous success, we now believe Apple shares are worth $240 today. Apple is poised to enter and in our view dominate two new categories (the television next year and the automobile by 2020) with a combined addressable market of $2.2 trillion, a view investors don't appear to factor into their valuation at all."

Icahn is a hugely successful man, in an industry where the scoreboard measures the successes with the amount of money that you have amassed, the man and his team have done better than most. The 80 year old native of Queens, New York is worth around 17.6 billion Dollars, according to Forbes, that is 43 in the world, down from 31st place last year. I suppose, that other than being the Icarus man, Eike Batista, what is in a few billion here or there when the numbers are so big? Batista, remember, "lost" 35 billion Dollars in personal wealth in less than a year, the reason for the inverted commas is that it possibly wasn't there in the first place.

Back to Icahn however, on Thursday last week, 11 months and 10 days after writing this open letter to Tim Cook, the dude said he no longer owned shares in Apple. I am guessing he ended lower than where he started. So much for being a no brainer, a company like this only coming along every half a century, the year 2020 and the car, the TV and the watch, as well as having huge respect for Tim Cook. The reason for selling? Fears around Chinese growth. His biggest position is no longer. I am not sure about you when you go about portfolio construction, chopping and changing like this on a whim (and I am sure there are other examples) when the stock doesn't go up or down as predicted.

What should you do with your Apple shares? Nothing. Whilst the company is selling their core product at a lower click than previously, I think that based on current price metrics, selling is the wrong thing to do. To sell at a little over 10 times earnings and a yield beyond two and a half percent based on a single bad year, that is wrong. Apple is cheaper than IBM, Cisco, Intel, definitely cheaper than Microsoft (and certainly Google and Facebook), it may not however be, as most businesses are, comparable to any of these companies. It is one thing to say cheap, the prospects, at least the immediate prospects are concerning. I suspect not as much as Mr. Market thinks, the quality is undisputed, services is becoming a bigger part of their business, I think Chinese consumption will be just fine. We continue to accumulate, even if uncle Carl doesn't want to own them any more. BTW, Carl still thinks that Apple is a great company, which is a compliment, not so?


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