While the media
has had a lot to say about Icahn’s Twitter account, no one has taken the time
to examine his trades in terms of social media sentiment. For someone who is
likely the world’s most socially active hedge
fund manager,
surprisingly little analysis has been done in this realm.
With the help of Market Prophit, a company that converts stock-related social media posts
into easy-to-read data, we’re able to look at how much chatter Icahn’s biggest trades
created. More interestingly, it appears that some of this buzz actually
predicted the moves before they happened.
Netflix
Netflix was the
recipient of a major cut by Icahn late last month. In a 13D filing and subsequent tweet after the
market’s close on October 22nd, the investor reported a 4.5% stake in the
streaming video company, about half of what he previously owned. This move came
24 hours after Netflix’s stock price had surged on promising third quarter
earnings.
Market Prophit’s
CEO, Igor Gonta, revealed to us that on the morning of the 22nd, social media
circles were already buzzing about a major seller “doing large block
sales” of Netflix, and Icahn’s name was visibly in the rumor mill. By the time the
market had closed, Icahn’s official SEC disclosure pressed the stock to drop
almost all of its gains from the previous day’s earnings report.
Apple
Any analysis of
Carl Icahn and Twitter must include Apple. On the afternoon of August 13th this year, Icahn tweeted that he had a “large
position” in the tech giant on the basis of undervaluation, adding that a
conversation with Tim Cook was on the table. As Gonta pointed out to us, shares
of Apple rallied by nearly 2.5% just 20 minutes after Icahn’s initial tweet,
and social media sentiment turned positive approximately two minutes prior to
the reveal (see graph here).
The next major
event on the Icahn-Apple timeline was on October 1st. Halfway through the
morning on this date, Icahn tweeted about the dinner he had with Tim Cook the
night before, in which he reiterated his desire for Apple to pursue a $150
billion share buyback plan.
Market Prophit
again picked up on bullish chatter before
Icahn’s tweet went live at 10:23am. This time, an uptick in positive social
chatter led the tweet by a full 40 minutes, and shares of Apple had already risen by
almost one full percentage point by half past ten. According to Gonta, social
media sentiment turned negative immediately following Icahn’s tweet “because
the price had already run up,” indicating that a classic “sell the news”
phenomenon had just taken place.
Sitting here in
early November, it’s unknown if Icahn will succeed in his quest to convince
Apple that a larger buyback will lead to a $1,250 stock price. What we can say with confidence, though,
is if the hedge fund manager is active on Twitter again, social media chatter
may predict it.
Disclosure:
none
