Hedge Funds

David Einhorn dumps Apple on fear of 'Chinese retaliation against America's trade policies'

Key Points
  • Grenlight Capital, the hedge fund of billionaire David Einhorn, sold its remaining Apple shares.
  • Sold on Aug. 31 at $228 a share, the remaining shares were worth about $40 million.
  • Einhorn said Greenlight's Apple position earned clients over $1 billion since its first purchase of the stock in May 2010.
Greenlight sells remaining stake in Apple
Greenlight sells remaining stake in Apple

David Einhorn's Greenlight Capital sold its remaining shares of Apple due to its heightened valuation and his growing fear of Chinese retaliation in response to U.S. tariffs, according to the billionaire's third quarter letter to investors.

"We ultimately sold because our differentiated thesis from 2011 has become consensus," Einhorn said. "We are somewhat worried about Chinese retaliation against America's trade policies."

Greenlight cut its stake in Apple by 77 percent in the previous quarter, or 486,000. Einhorn's firm sold the remaining Apple stock on Aug. 31 at $228 a share, the letter said, offloading about $40 million.

Since Greenlight's first purchase of Apple in May 2010, the firm said its investment earned clients over $1 billion.

Apple shares skidded after his announcement, down 2.4 percent.

Greenlight has had a painful year and that did not slow down in the third quarter. The firm lost an additional 9.1 percent in the most recent quarter – bringing Greenlight's total losses for the year to 25.7 percent, the letter said.

Einhorn pointed to the firm's bet on Apple in 2013, when the stock was dragging on Greenlight's portfolio, as reminiscent of Greenlight's situation this year.

"It basically feels the same today – but now the market appears to be rejecting our entire strategy of value investing," Einhorn said. "Just like with [Apple] in 2013, few agree with us on most of our positions."

Greenlight also bought stock in cable TV provider Altice USA and British telecommunications company BT Group, the letter revealed. Einhorn said Altice shares trade at a discount with "better new investment opportunities" compared to other cable companies like Charter Communications and Cable One. BT Group "shares were cheap," Einhorn said, with potential value unlocked if the British telecom spins off last mile network Openreach.