Apple Inc has started attracting the bears as one of the most vocal Apple bears has revealed a new short position in the stock. On Monday, Doug Kass, a hedge fund manager has revealed to CNBC that he has a short position in Apple. The news about the short position echoes fears in the market about how Apple has been logging its worst performance in the past six years. It seems that Apple is getting near the proverbial glass ceiling and bigger iPhones can’t just keep the stock afloat.
Doug Kass thinks that Apple has grown too big and that its past success will make it hard for the firm to beat its own record and record new successes. He also noted that the “law of large numbers will be one of the headwinds that the firm will be facing going forward. Kass’ position echoes fears of about the possibility of a selloff that saw Apple losing more than 50% in its share price in 2008.
The bearish case for Apple
Doug Kass raise some interesting insights on the bearish outlook for Apple but you’ll definitely find more bullish voices to drown out the bearish sentiment. More so, kass is a hedge fund manager who “hedge” risks; hence, regular investors might want to exercise some caution in acting based on his words.
Kass opined that the firm has grown too big to see any decent growth going forward. He says, “from a critical standpoint, Apple’s recent iPhone upgrade likely represents the last important smart-phone product-cycle for some time (size matters!). And it’s growing clear that Apple TV, Apple Pay and the Apple Watch won’t produce a meaningful incremental impact on AAPL’s sales and profits”.
Kass also noted that the shares of the tech giant are on the way to seeing a correction as the stock lost 2.01% in the last one month. He says, “several analysts boosted their Apple outlooks this week,… the stock is moribund in my view… Apple’s shares might prove to be an “ATM” in a more-meaningful market correction. The shares are “overowned” and the bull case is known but might be ending. After all, who’s left to buy?”
Apple might shame the bears in Q3
Despite the growing fears about how Apple’s stock might fare in the next couple of months, some analysts think that the firm’s Q3 result might silence the bears. Max Wolff, the chief economist at Manhattan Venture Partners opines that the market is showing needless fears about Apple’s sales number for the Watch and iPhone. He noted that a single revelation from the firm about its car project might silence the bears.
Wolff seems to be certain that Apple would be able to court Wall Street again when it reports it third quarter earnings. He says the excitement in the stock will be back after the third quarter results. In his words, we still think it’s a great story, we still think it’s going to have a good six month.