Carl Icahn clarifies his stock-caution comments as others downplay them
Activist investor Carl Icahn has clarified his comments that contributed to pushing stocks to session lows on Monday.
Icahn posted a clarification on his website Shareholders’ Square Tablein order to shed light on his stock-related remarks originally reported on Monday from the Reuters Global Investment Outlook Summit. “I am very cautious on equities today. This market could easily have a big drop,” Icahn was originally quoted by the news service as saying.
“Reuters was completely accurate that I am concerned about the level of the market. But I also made it clear on the conference call (and I believe as Reuters reported it), that it is almost impossible to predict what a market will do in the short term. There are too many variables,” Icahn wrote on his website.
Often, continued Icahn, when investors are worried about the markets, “we hedge to some extent and this is one of those times.” He said his firm’s investment funds have had an annualized return of around 27% since January 1, 2009, which would have been greater if they hadn’t hedged.
“As I have often said, picking short-term moves in the market is like predicting how many sevens the “hot” dice player will continue to roll,” he said.
Icahn also addressed comments he made at the conference about Apple Inc.AAPL +0.04%. He said he still thinks Apple’s stock price is undervalued and that CEO Tim Cook feels the same way.
But he also criticized Apple for holding onto too much cash. Apple isn’t a “bank” and “should not be run like a bank because investors did not invest in a bank,” he said at the conference.
“While I do not micromanage, at the risk of being immodest, I believe that in the area of allocating capital there are very few better than we and we hope to be able to be involved, as a large shareholder, with Apple, in this area,” said Icahn on the Shareholders” Square Table website.
As for his stock comments from Monday, several observers were brushing aside the power that just one man could have over the market. Stan Shamu, analyst at IG Markets was one of those, saying that “at such elevated levels investors are always looking for excuses to take some profits off the table.”
Sarhan Capital’s Adam Sarhan pretty much agreed, saying the market is “very extended and happened to fall after the Dow industrials DJIA -0.06% and S&P 500SPX -0.20% crossed above two very obvious round numbers. It is important to keep in mind that markets are counter-intuitive in nature and rarely move when things are that obvious.”
Sarhan says he’s still bullish on the market, but finds the market is getting “very extended and a bit frothy up here.”
Added Stephen Guilfoyle, chief economist at sarge986.com, of Icahn’s Monday comments:
“It was nothing new, nothing that you did not know, but it is food for continued thought…Equities seem fairly valued to me, or should I say, not severely overvalued…”