Billionaires sell Apple stock and buy stock inventory that has increased by 510% over the past decade
In the first quarter, billionaires David Shaw and Louis Bacon sold Apple and purchased O’Reilly Automotive, which has increased by 510% over the past decade.
Apple has struggled to incorporate artificial intelligence into its business, and the company has been in over seven years without a groundbreaking new product.
President Trump’s tariffs encourage consumers to serve older vehicles rather than buying new vehicles, so O’Reilly Automotive could be the winner.
Millionaires of hedge funds listed below apple(NASDAQ: AAPL) Purchased in the first quarter O’Reilly Automotive (Nasdaq: Orly)a company whose stock price has lost 510% in the past 10 years, 15-for-1 Stock Split Early June.
David Shaw’s De Shaw & Co. sold 340,900 Apple shares and trimmed 6% of its shares. The hedge fund has also added 19,000 shares of O’Reilly Automotive, but remains a very small holding.
Louis Bacon’s Moore Capital Management sold 495,800 stakes in Apple, cutting 97%. The hedge fund also bought 240 shares of O’Reilly Automotive and launched a very small position.
Importantly, both hedge funds are still exposed to Apple, and neither of them have a particularly large position in O’Reilly Automotive. However, investors still need to consider trading both of their portfolios. This is why.
Image source: Getty Images.
Apple is durable Brand Hori It is built on design expertise that spans hardware and software. The company again led the market in March quarter with smartphone revenues, recording double-digit sales growth in the service segment due to the strength of advertising, app stores and cloud storage. However, its overall performance remained unmotivated. Revenues rose 5% to $95 billion, while the commonly accepted accounting principles (GAAP) net profit rose 5% to $24.8 billion.
Importantly, Apple has struggled to incorporate artificial intelligence (AI) into its business. Analysts thought that the suite of generator AI capabilities added last year (i.e. Apple Intelligence) would catalyze a massive iPhone upgrade cycle, but consumer response has been overwhelming up until now, perhaps as the company repeatedly delayed its highly anticipated AI upgrade to its digital assistant Siri.
Apple’s failure to monetize AI speaks to a bigger problem. The company appears to be losing its ability to innovation. After a long mission to launch highly successful products, the 2007 iPhone, 2010 iPad, 2015 Apple Watch, and 2017 Airpods-apple have been over seven years without the notable new products. And the inability to take advantage of the rising demand for AI is a troubling continuation of that pattern.
Wall Street expects Apple’s revenue to increase 11% each year over the next three years. This has made the current 33x revenue valuation seem expensive, but analysts may be overvalued. Apple’s revenue has deteriorated by less than 2% per year over the past three years, despite the company buying back 8% of its outstanding shares.
Put another way, if Apple had not repurchased the stock in the last three years, revenue would have fallen by nearly 5% over that period. Also, revenue growth could be modest over the next few years due to the lack of a clear catalyst on the horizon. Investors should avoid stocks right now, and shareholders with large positions should consider trimming.
O’Reilly Automotive is one of the largest specialized retailers of aftermarket auto parts, tools, equipment and accessories. The company operates more than 6,400 stores across North America, serving both Do-it-your (DIY) and professional customers. It also has a robust distribution network that allows for “timely access to a wide range of products,” which helps customers retain their customers.
Importantly, O’Reilly is subject to tariffs on imported cars and parts, but the obligations imposed by the Trump administration can actually be a net victory for the company. This is because a 25% tax on imported cars will raise car prices, so consumers encourage the service of old vehicles rather than buying new vehicles. Additionally, the average interest rate on U.S. car loans has almost doubled over the past four years.
O’Reilly reported that it would encourage second quarter financial results. Revenues rose 67% to $4.5 billion, with 67 new store openings and 4.1% sales growth for the same store. Meanwhile, GAAP’s earnings rose 11% per diluted share to $0.78, outperforming revenue growth as the company bought back 6.8 million shares. Management also raised full-year guidance to ensure revenues are expected to increase by 9% in 2025.
Wall Street expects O’Reilly’s revenue to increase by 10% per year over the next three to five years. This makes the current valuation of 36x revenues appear relatively expensive. Nevertheless, I think investors should consider buying a small position with this stock today. And if the stock price drops, they should consider building a larger position with a more reasonable valuation double.
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Trevor Jennewine There is no position in any of the stocks mentioned. Motley Fool has a position at Apple and is recommended. To Motley’s fool Disclosure Policy.
