Doug Kass: I Blew It On Apple Target

Seabreeze Partners founder Douglas Kass admitted on Tuesday what a growing number of analysts have been forced to acknowledge as Apple's slump deepens: he may have been all wrong.

The tech giant's shares have tumbled by more than 40 percent from its highs above $702 hit last September. Since then, most Apple watchers have clung to the belief the iPhone maker could turn things around.

Yet as all three major averages pushed higher Tuesday, with the Dow Jones Industrial Average shooting up to its highest level ever, Apple's stock has been left in the dust.

(Read More: Dow Smashes Record: End of the 'Lost Decade'?)

"Frankly, I'm thinking I probably made a mistake," said Kass on CNBC's "Futures Now."

The investing guru bought Apple at the close on Friday, when the stock was pinned on expiration, and continued to add to his position. Yet when the stock popped Tuesday morning, he immediately sold his shares.

"At $425 or $430 or so, there seems to be substantial value in the company from a trading standpoint," Kass said. "The problem facing fundamental investors and Apple, is that we still have a lot of earnings reductions from Wall Street coming ahead."

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Douglass Kass

Apple is sitting on a war chest of more than $137 billion in free cash, but investors are growing worried that the company is losing its innovative edge. The technology empire built by Steve Jobs is struggling to beat back a challenge from Samsung, whose Galaxy smartphones are running neck and neck with the iPhone.

After Apple's earnings disappointed markets in January, Kass called its stock "dead money." From the iPod to the iPhone and iPad, Kass noted that the company has grown so large that it may be losing its "first-mover advantage" as competitors are catching up.

Elsewhere in the technology space, Google edged higher after Jefferies boosted its price target on the search-engine giant to $1,000 a share from $875 a share with a 'buy' rating. The Internet company hit an all-time high on Monday.

Although Kass had criticized the search giant in September 2012, he now thinks the tech company is well positioned. Google is also seen as one of Apple's top competitors.

"The momentum both from the standpoint of the stock and the company's fundamentals are strong," Kass said.

— By CNBC's Drew Sandholm with Reuters

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