REPORT: Apple Analyst Andy Zaky Lost $10.6 Million Of Other People's Money In The Apple Crash
He lost even more money for people who listened to his Apple analysis, but didn't invest directly with him, says Elmer-DeWitt.
Zaky gained fame in the Apple blogging world by making wildly bullish forecasts about Apple that proved to be fairly accurate.
As he became better known, he set up his own fund; Bullish Cross Capital L.P., which Elmer-DeWitt describes as "basically an Apple-only hedge fund".
When Apple was a rocketship screaming to the sky independent analysts like Zaky were lauded in the Apple blogging world.
They made the more conservative professional sell-side analysts look like chumps by printing wildly bullish estimates that came close to what Apple actually did.
This worked very well until it didn't. When Apple stopped crushing earnings, the indy analysts didn't seem all that smart. When Apple's stock started crashing, they missed it.
Zaky missed it, too, costing his investors millions.
Zaky made five different price target calls on Apple. The first four went very well. The last one did not.
His most recent call on Apple was on October 16. He said the stock was going to $1,000. Influential Apple blogger John Gruber linked to Zaky's analysis, writing, "I don’t offer investment advice, but Andy Zaky does — and those who listen to him have done pretty well."
In this case, people that listened to Zaky did not do well.
What's worse is that Zaky reportedly whiffed on both of Apple's big rallies last year. Elmer-DeWitt says he missed when Apple raced to $700 in September, and missed when it raced to $644 in April. To make up for the April miss, he invested in Apple calls in May, which didn't work out. (Calls are bets the stock will be worth more in the future.)
As Apple crashed last fall, he once again invested in calls, which ended up losing all of his investors' money.
What's worse, from Elmer-DeWitt's perspective, is that Zaky had a newsletter with 700 subscribers. A lot of those people were not sophisticated investors who understood the risks of listening to Zaky.
Those people that followed his advice lost all their money.
The sad lesson of this story: Be careful who you're listening to when it comes to investment advice, and avoid trying to buy and sell individual stocks.
We reached out to Zaky for comment, but he hasn't responded.
He told Elmer-DeWitt, "The bottom line is we didn't expect Apple to crash 40% of its value inside of a few months and trade at a 10 P/E ratio given its cash flows. We were on the bull side of the Apple case and it didn't work. I wish I could give you more, but then it would just look like a complicated set of excuses. And what's the point."
Zaky has shifted his focus away from Apple to SPY, an ETF that tracks the S&P 500, says Elmer-DeWitt.
Read the full story on Zaky at Fortune >