Hedge Funds were dumped my Mr. David Einhorn, he feared the China Trade War may affect his Apple Stocks and had to make the decision
David Einhorn’s Greenlight Capital got rid of all of its shares in Apple, due to the risk of the potential retaliation from China against U.S. trade tariffs.
In a letter from the billionaire to investors seen by CNBC, Einhorn claims “We ultimately sold because our differentiated thesis from 2011 has become consensus.” Einhorn also adds “We are somewhat worried about Chinese retaliation against America’s trade policies.”
This would be affecting imports, by imposing restrictions and other measures that could affect the iPhone maker in the country.
The Greenlight Capital fund reduced its stake in Apple by 486,000 shares, approximately 77% of its holdings in the company, in the 2nd quarter. On August 31, the fund sold the remaining shares at $228 apiece, dumping around $40 million in the process.
Greenlight first bought into Apple in May 2010, and so far its investment in the iPhone producer has earned its clients over $1 billion.
'Despondent' Musk's Tesla resembles Lehman, Greenlight's Einhorn says | Article [AMP] | Reuters https://t.co/yYNt2xS7iU
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The share selloff finally didn’t hurt Apple that much. It recently enjoyed its highest stock price, touching $230 during trading on Tuesday.
The share price did drop slightly after the Einhorn announcement, dropping down by 2.4%.
Mr. Einhorn’s worry is very serious
Einhorn’s dilemma of Chinese interference in Apple’s business arises from the ongoing trade war between the United States and China.
The Trump Administration hitting Chinese imports with import tariffs.
In September, the U.S. applied $200 billion in new tariffs against a variety of goods from China, but so far the administration has tried to avoid placing fees on produce affecting Apple.
America and China’s Trade relations gone Rancid
3 days after the $200 billion in import tariffs were applied, China retaliated by announcing $60 billion in tariffs against U.S. goods.
Apple CEO Tim Cook has verbally denied the measures, calling trade “not a zero-sum game,” and expressing optimism that the two countries will “sort this out and life will go on.”
Apple itself has stopped the tariffs and “other protectionist measures” in Securities and Exchange Commission (SEC) filings, warning the tariff war could materially affect the company’s finances.