Cramer: Carl Icahn Was Right to Sell Apple at $95

 | May 16, 2017 | 12:30 PM EDT
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Hedge fund extraordinaire David Tepper buys some Allergan (AGN) . He's a smart guy, buy some Allergan. David Tepper sells some Allergan. Say goodbye to that stock.

Activist Jana buys a ton of Bristol Myers (BMY) . Got to get into Bristol Myers. Maybe Jana forces a sale. Oops. Jana offloads most of its Bristol Myers, maybe time to get out of that one.

Yep, it's 13-F time where funds disclose their holdings and people get real excited about what hedge funds might be doing and want to piggy-back or get on board figuring, what the heck, Tepper, Jana, Buffett, whatever, have done the research for me, why not tag along?

It's a time-honored concept and with the consecration of hedge funds as be alls and end alls even as the Oracle of Omaha has told you that hedge funds as a group have underperformed, it's amazing that we still care what they do. After all, they aren't telling us anything. They aren't advising us. The filings are way out of date and for all we know they are selling for any number of reasons including that they have a profit or they have redemptions. We have no idea.

Just in case you think I am crazy and these people are worth piggy-backing on, I want you to go back to April of 2016 when we learned that Carl Icahn had sold all of his massive position in Apple (AAPL) when the stock was $95.

What was he concerned with? He came on CNBC's Halftime with Scott Wapner and said " I am worried about China," so he dumped the stock.

Now here's what's interesting about this and why it is so difficult to rely on a hedge fund manager, any manager, to do the work for you.

Sure, the obvious is true: it was a terrible time to sell. The stock was at the bottom. I had Tim Cook on Mad Money to talk about how the company's best days were ahead of it and that the new i-phones would be loved. They were. Plus, Warren Buffett decided to buy a ton of it making it his largest position because he says it makes fantastic products and has tremendous customer loyalty.

But put all that away. Forget it.

It's not fair to Carl.

What you need to know is first, Icahn was right, it was smart to worry about China. There was a slowdown in China and it hurt the company's sales. It mattered but it wasn't the be all and end all and it turned out to be a moment in time where China wasn't strong but it has gotten stronger since then even though it isn't where the company would like it to be.

Second, Carl had a gigantic gain in the stock. It is a total cardinal sin to turn a gigantic gain into a loss or to give up a magnificent win, especially because the stock had been heading down.

In other words, Icahn did what was right for Icahn. He didn't necessarily do what was right for you because he doesn't work for you and he has zero fiduciary duty to you. In fact, I consider it a gift that he even tells you what he does in more real time than these filings we peruse so closely.

Nevertheless, the lesson here should be crystal clear, whether it be Bristol-Myers or Allergan or Apple or any other stock, you must do your own research. Way too often you will be buying high and selling low if you blindly tag along.

That's not what a pro does. It's what an amateur does and I want you to recognize that while you may not be a full-time manager there is no reason you have to be a full-time amateur.

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