Apple Inc. (AAPL)’s Fair Market Value Is $650: Randall Abramson


Apple Inc. (NASDAQ:AAPL) is still one of the most popular stocks among hedge funds but hedge funds have been losing interest in the stock during the first quarter. Meena Krishnamsetty, the editor of hedge fund tracking website Insider Monkey,  tells us that there were 160 hedge funds with bullish Apple Inc. (NASDAQ:AAPL) at the end of 2013 whereas this number declined to 129 at the end of March. Billionaire David Einhorn cut his stake by 17%, tech hedge fund manager Phillippe Laffont slashed his Apple Inc. (NASDAQ:AAPL) position by 85% during the first quarter. Other Tiger cub hedge fund managers Rob Citrone, Robert Pitts, and Robert Bishop completely sold out their Apple Inc. shares. Billionaires Daniel Och, Dan Loeb, and Paul Tudor Jones also bailed out.


Not everyone is bearish though. Wall Street wolf Carl Icahn boosted his stake to $4 billion. Recently we received Toronto-based Trapeze Asset Management’s investor letter in which Randall Abramson discloses a large position in Apple Inc. (NASDAQ:AAPL). In fact, Apple Inc. is Randall Abramson’s one of top 3 holdings. Here is what he told his investors about Apple:

Apple recently reported results which came in ahead of analysts’ expectations from strong iPhone sales. It also announced a boost to its share repurchase program which should result in $90 billion worth of stock repurchased. Now trading just above $600, the discount to our $650 FMV estimate has narrowed. However, our Apple valuation model is conservative and assumes very harsh average selling price declines and decelerating growth rates for its major products. Furthermore, our model does not factor in new products or services that have been long rumoured such as the iWatch or iTV. The company keeps suggesting revolutionary products are in the works and we’ll evaluate their incremental potential once announced.

Apple Inc. (NASDAQ:AAPL) is fast approaching the $650 mark. However, it may not stop there. Last we covered Bill Miller’s Apple predictions. Bill Miller said Apple Inc. is worth $700-$750.