Once in a Lifetime Opportunity to Buy Apple?
By: Many investors can't sell Apple fast enough, but Joe Terranova and Doug Kass both think selling is absolutely the wrong trade.
Shares of Apple have tumbled almost 20% in the past month, with skeptics worried that the stock's market cap just got too big for its own good.
"No matter how bullish a story, you need new buyers of the stock each and every day, or it will go down. Simply put: Apple has run out of them," said Enis Taner of RiskReversal.com
Maybe not.
| Name | Price | Change | %Change | Volume | ||
|---|---|---|---|---|---|---|
| AAPL | --- |
On Friday's Halftime Report trader Joe Terranova, chief market strategist for Virtus, told us he hit the buy button as did famed market timer Doug Kass, president of Seabreeze Partners.
These pros believe Apple's decline presents opportunity.
In fact, they both think it may be the opportunity of a lifetime.
Kass thinks the decline has to do with an unusual situation involving hedge funds – more than anything else.
"There's chatter that several hedge funds were over their skis in Apple," Kass said. "I know a number of hedge funds that have in excess of a 15% weighting."
When the stock turned lower, they sold quickly.
"It's been acting as ATM for hedge funds – a good way to raise cash."
However both Kass, Terranova and analyst Brian White of Topeka all say the fundamentals have not changed. Demand for the company's gadgets remains white hot and Apple continues to gain market share.
"It's not just a growth company – it's grown 82% a year for the past 8 years," said White.
Yet because of the decline, "Apple is selling at 7 times ex-cash ," which all the pros say is simply too cheap.
"This sell-off is completely unwarranted and shocking," said White. Eventually all these pros expect fundamentals to prevail. "At $525 the risk reward is overwhelmingly positive," White added.
