This content is from: Portfolio

The Morning Brief: Icahn Exits Apple and Stocks Fall

Carl Icahn rocked the markets Thursday when he told CNBC he was fully out of the shares of hedge fund favorite Apple. Apple and the rest of the stock market dropped sharply after he made his comments. Icahn stressed he still thinks Apple stock is cheap, though China worries him. “China obviously could be a shadow for it [Apple], and we have to look at that,” he said.

The 80-year-old investor said he sold his stock last quarter at around the current stock price, giving him nearly a 50 percent profit since establishing the position three years ago. He said on the call that CEO Tim Cook “did a great job” but expressed concern about Apple’s relationship with China and the stability of its economy. Of course, Icahn supposedly is the guy Donald Trump says will go and negotiate a better trade deal with China if Trump becomes president. Is Icahn also betting on Trump becoming president and anticipating the likely outcome of subsequent trade talks? “If China was basically steadied, I would probably go back into it [Apple’s stock],” Icahn said.

The announcement came two days after Apple reported its first decline in revenues in a decade and its first-ever fall in iPhone sales. We reported on Thursday that several banks cut their price targets on the stock after the earnings announcement and many firms reduced their estimates. The stock is now down more than 9 percent in the past two days, closing Thursday at $94.83. It’s also down more than 17 percent from its mid-April high. Apple’s shares were the fourth most widely held stock among hedge funds at the end of the fourth quarter. In less than three weeks, we will know where hedge funds stood with the stock at the end of the first quarter.


Another so-called FANG stock surprised Wall Street on the upside. Shares of climbed more than 12 percent in after-hours trading Thursday evening after the e-commerce and logistics giant reported quarterly earnings that easily exceeded expectations. The report gives some investors hopes that could help steady the markets on Friday.


Several investment banks raised their price targets on Facebook the morning after the social-media giant reported strong quarterly earnings. Stifel Nicolaus lifted its target from $130 to $145 even though it told clients Facebook’s growth will likely decelerate over the next few quarters, citing tougher year-over-year comparable ad revenue numbers. But it still expects impressive growth because of the easing of foreign exchange headwinds and growth in video ads. Barclays, meanwhile, raised its price target on Facebook from $140 to $150, celebrating the fact that first quarter advertising growth was much greater than many anticipated. Shares of Facebook surged more than 7 percent on Thursday to close at $116.73.


Shares of Marvell Technology Group rose for a second straight day — a total of 4.8 percent over the two-day period — after activist firm Starboard Value said it reached a compromise with the semiconductor maker. Under the deal, Marvell will appoint three people recommended by the New York activist firm to serve on its board: Peter Feld, Richard Hill and Oleg Khaykin. In addition, Starboard has the right to recommend an additional independent director to the board.

Feld is the research director for Starboard who currently sits on several boards the firm has targeted. Hill was also one of four Starboard nominees that Yahoo agreed to add to its board earlier this week; he served as chairman of chipmaker Tessera Technologies, a one-time Starboard activist target. Khaykin served as president, CEO and director of International Rectifier Corp., a maker of power semiconductors. Marvell also agreed to appoint Feld as chairman of the nominating and corporate governance committee and as a member of the executive compensation committee. Under the deal, Starboard agreed not to nominate any individuals for election to the board at the 2016 annual meeting and not make any proposals at the meeting.

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