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Why Did Carl Icahn Offload His Stake in Apple?



What Carl Icahn thinks about Apple

Carl Icahn has been a huge fan of Apple (AAPL). He repeatedly called the investment a “no brainer.” He thinks that Apple is a great company with great management. In his interview with CNBC, where Icahn disclosed he exited Apple. He also that “Tim Cook did a great job. I called him this morning to tell him that, and he was a little sorry, obviously. But I told him it’s a great company.”

In 2013, it was Carl Icahn who advised Tim Cook to return more to his shareholders from the company’s cash pile. Since then, we saw Apple as one of the forerunners of the buyback spree in the US. The company also raised dividends. Since then, we saw the company’s stock lead the stock market performance on several occasions.

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Icahn is concerned about Apple’s relationship with China

Icahn, who has already made profits from his investment in the technology (XLK) (QQQ) giant, perceives risk in holding the stock any longer. He made about $2 billion off his Apple trade. However, Icahn is concerned about Apple’s (AAPL) relationship with China (FXI) (YINN). This made him exit the company. China’s weakness started impacting Apple’s stock price. According to the company’s latest earnings release, Apple’s revenue from China fell 26% in 1Q16 over the previous year.

Interdependence between China and Apple

There’s a lot of interdependence between Apple (AAPL) and China (FXI). While Apple provides vast employment opportunities in China, China accounts for a 25% share of the company’s top line. Apple sells more in China alone than it does in all of Europe (FEZ).

Once China is steady, Icahn would probably go back to holding stake in Apple. He never doubted the strength of the company. He appreciates its management. However, with China’s unsteady state impacting Apple’s stakeholders’ returns, Icahn would prefer to keep some distance.


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