Apple 2.0

Covering the business that Steve Jobs built

The Apple-to-$45 guy strikes again

June 20, 2010: 8:11 AM ET

He's not a hedge fund manager, although he plays one on Twitter

J. G. Savoldi

I don't like giving free publicity to someone who's probably got more than he deserves, but in this case I'll make an exception.

I got an e-mail Saturday night from BAM Investor's J.G. Savoldi. He's the guy who got some attention last week announcing on Twitter that Apple (AAPL), which was trading above $270 a share at the time, was about to plummet to $45 -- perhaps as early as this fall.

To make sure nobody missed that eye-catching call, the tweet was followed up by a press release and, after that was roundly booed by Apple partisans, a blog post entitled BAM's 45 Dollar Target Stirs Angry Apple Mob.

We mentioned Savoldi briefly yesterday in a post that reminded readers that it's not a good idea to take investment advice from hedge fund managers who tweet their predictions. That prompted an e-mail from Savoldi that begins:

"I'm not a hedge fund manager although I did work at a large hedge fund in SF back in 2005 and you guys are way off base on this representation of our work.  We're in the business of protecting portfolios from disasters not 'shameless publicity stunts' as you wrote in your article."

OK. Savoldi is not a hedge fund manager, although I had to go back to my source material to see where I got that impression.

Perhaps it was the press release that used the words hedge and hedge fund eight times. Or Savoldi's website, that offers his predictive services to institutions, hedge funds and professional traders. Or his blog post, which talked about providing retail investors with information normally viewed only by his hedge fund clients.

As for the charge of publicity-seeking, I'll let the reader decide whose interests Savoldi had at heart with that tweet, the mom-and-pop investors' or his own.

Even Silicon Alley Investor's Henry Blodget, who urged his readers to at least "give this fellow's logic a moment's consideration" concludes:

"Okay, forget it.  No Apple-specific logic whatsoever.  Just a market-crash call wrapped in an Apple headline."

In any event, Savoldi is sticking with his story. In that e-mail he calls Apple a "bubble stock" and writes:

"I've never seen a set up like this one fail in 90 years of market data I track.  NEVER."

With Savoldi's permission, I've pasted his message below:

From:     JG Savoldi <jgsavoldi@bamreport.com>
Subject:     AAPL article (BAM Investor)
Date:     June 19, 2010 11:48:36 PM EDT
To:     PHILIP ELMER-DEWITT <ped@mac.com>
Cc:     Rod Wilson <rod@baminvestor.com>

I'm not a hedge fund manager although I did work at a large hedge fund in SF back in 2005 and you guys are way off base on this representation of our work.  We're in the business of protecting portfolios from disasters not "shameless publicity stunts" as you wrote in your article.

"Savoldi's prediction, of course, was nothing but a shameless publicity stunt. Almost anything can happen in the stock market, but Apple's shares selling for less than the company's $42 billion holdings in cash and marketable securities is not one of them."

You also should know better than to make an outrageous statement like the one above regarding AAPL's "42 billion in cash".  I don't peddle fundamentals but the company could easily spend a portion of their cash, lose a portion, and get caught up in another horrendous stock market crash.  By the way, do you have any intimate knowledge about their currency hedging strategy?  You do know that many companies are going to take a beating due to the USD's huge move up and the EURO's recent free-fall don't you?  And do you know for a fact that they won't spend money on an acquisition?  Do you know for a fact that they won't do a one time stock dividend?  Do you know for a fact that Android will not eat into AAPL's iPhone mkt share.

Come on.  You should do a bit more homework before you blast my ability to identify bubble stocks.  I've never seen a set up like this one fail in 90 years of market data I track.  NEVER.  I also have multiple examples of this exact same set up working in big-name stocks and shockingly, fundamental analysts too self-absorbed to consider another point of view, held those as they crashed 70-100% after our warning.

I don't have an axe to grind here and I purposely have a very small PUT position in AAPL but I'll probably get rid of that position so that I can avoid any semblance of stock-specific bias.

Sincerely,

JG Savoldi

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[Follow Philip Elmer-DeWitt on Twitter @philiped]

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About This Author
Philip Elmer-Dewitt
Philip Elmer-DeWitt
Editor, Apple 2.0, Fortune

Philip Elmer-DeWitt has been following Apple since 1982, first for Time Magazine, and now on the Web for Fortune.com.

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