Apple Inc. (AAPL) Avoidable for Short Term Investment: Mark Newton

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Apple Inc. (NASDAQ:AAPL) has split its share price and the price is around $92. It has started trading with the new price today. The company has taken care of its old investors though. The company has given each existing shareholder 6 additional shares for each share they help before June 2 2014. However, this is the fourth time Apple Inc. (NASDAQ:AAPL) has split the stock. Every time the company split the stock it has moved up and then sold off.

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Mark Newton of Greywolf Execution Partners was on CNBC Fast Money last Friday and he had some interesting analysis about this stock split. He said Apple Inc. (NASDAQ:AAPL) should not be considered for short term investment. He began stating:

“The stock has gotten to nosebleed levels at current levels so I don’t think the stock can make much progress before it pulls back”

Newton continued with this analysis and said that the price gain Apple Inc. (NASDAQ:AAPL) got in the last 35 trading days might not help the new stock split. Apple’s stock has gained over 25% in the last 35 trading days which surely appears overbought to Newton.

He had given three reasons to avoid the stock. The first reason was that the stock was overbought in the last 35 trading days. He compared the current situation to the stock prices of September 2012. The second reason to avoid Apple Inc. (NASDAQ:AAPL) for short term gains was that the weekly bands that control the movement in the stocks were hitting the higher part of the bands consistently. The third reason was the history of stock splits the company has; Apple Inc. (NASDAQ:AAPL)’s stock split three times before and every time it splits, the stock moved up and then sold off 5 – 10% after that split. He believed that the stock has had a very good run post-split. He further mentioned:

“Nobody is questioning the long term fundamentals or really even the chart technically on a long term basis. This is more short term concern about the stock has moved too far too fast. “

He doesn’t see the stock moving up faster in the next couple of months. He said that it might only go to $85 from $92 and it might take few months before anyone can see much growth in the prices of Apple Inc. (NASDAQ:AAPL)’ stock price.

With the split of shares, Apple Inc. (NASDAQ:AAPL)’s current get seven shares for each share they held. Carl Icahn’s Icahn Capital Lp holds approximately 7.5 Million shares in the No.2 brand in the world as of March 31 2014 and their share count is going to be multiplied by 7. Other key investors in Apple Inc. (NASDAQ:AAPL) are David Einhorn’s Greenlight Capital with almost 2 Million shares before the split and Nokota Management, which holds 675,000 shares as of March 31. Apple Inc. (NASDAQ:AAPL)’s would surely not put in long term investors in doubt though.

Disclosure: None

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