In the list of “worst decisions of your life,” you might think that selling AAPL stock on IPO day – the day the company went public – would be pretty high up the list. But seven investors who did just that, and missed out on AAPL billions, claim not to regret the decision…
Tim Galbraith was one of them, and he tracked down six more, for a Fast Company piece:
This week marks the 40th anniversary of Apple’s initial public offering (IPO), a legendary wealth creation event that still haunts those who missed out. A single share purchased on December 12, 1980, for $22 is now worth nearly $22,000. For those who savor the make-believe of perfect foresight, it is the ultimate woulda-coulda-shoulda fantasy. For early investors who sold their stake on IPO day, the pain is all too real.
Just 100 shares at the time would have been worth $2.2 million today – and for the investors concerned, the loss is into the billions.
One of them was then banking associate Paul Wood, who sold $5 million worth of stock. He argues the sale worked out just fine.
Wood, who went on to co-found private equity firm Madison Dearborn Partners, had no regrets when Continental Illinois trimmed the position and locked in gains to contribute to the bank’s overall earnings. Its original stake was a 78-bagger in 28 months. It would take 30 years before an Apple IPO investor would see a 78-fold return.
The last time Apple allowed outside investments prior to its IPO was 16 months earlier. The other six investors bought their stake then, and say the percentage returns they saw in that short time were as much as they would have seen by buying on IPO day and holding onto the shares until today.
I continued to track down the original seven investor groups — or their colleagues, as several obituaries blocked my path. Not surprisingly, not one of the seven asked for a do-over. Many went on to replicate their Apple success and become huge stars in the venture capital community. As professional investors, they did exactly what they were supposed to do: risk-managing a portfolio requires trimming positions, assessing risks, and repeating it. Far from being the worst trade, they all made huge multiples on their investments. It took decades for new Apple stock owners to earn what these private investors did in just months.
Indeed, they point out, for most of that time, they wouldn’t have been making money.
Erased from memory is the pitiful stock action for most of the 1990s, not to mention the two CEOs sandwiched after John Sculley and before the Jobs homecoming, during which Apple traded near a split-adjusted 10 cents a share. We forget that the iPhone only launched in 2007, and the iPad came to market in 2010. A staggering 80% of Apple’s market valuation has been created in just the past seven years.
Most also went on to make highly successful investments elsewhere.
Both are fair points — but I don’t think any of us are going to quite believe they have no regrets at all about missing out on those AAPL billions…
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