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Afam Edozie

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  • Apple Screwed Up Big Time [View article]
    Writing here from your third world, I don't see the second hand Apple's you are talking about. Android is King over here by a wide margin
    Jan 20, 2014. 08:43 AM | Likes Like |Link to Comment
  • Apple's A8 -- What It Will Be And Why It Matters [View article]
    Well said. And the Google model in my opinion will ultimately triumph.

    To a large extent Microsoft/Intel distorted the hardware/software evolution over the past ten to twenty years. As the monopoly has been broken along with the cycle of bloated software eating up increased performance, we are back on the curve of falling prices.

    Android phones are already at the $60 price points (at least in emerging markets) and those points will be closer to $20 within the next five to six years.

    Trying to make money selling hardware and OS software will become increasingly challenging. After all is said and done devices and OSes are commodities. Increased competition with html 5 and subsequent versions (vs. the OS), and faster internet connections, will only make this more so.

    Better to try to monetise the user than monetise the device or its software.
    Jan 11, 2014. 02:26 AM | 3 Likes Like |Link to Comment
  • Apple's Huge Ecosystem Blunder [View article]
    I live in Lagos, Nigeria. I can buy a brand new fully functional android phone for under $100 from Techno, Huawei, or a number of other vendors. If I want to go up market I can buy a brand new Samsung bottom of the range (and probably not marketed in the US) for under $200.

    I can also buy any of these phones refurbished at less than half this price. Even in the refurb market Apple is in a weak position.

    James is 100% right, in giving up market share for high margins, they will end up losing both. This is consumer electronics, not rocket science. Samsung lean't this well as they took down Sony in the TV market.
    Sep 13, 2013. 12:22 PM | 20 Likes Like |Link to Comment
  • Apple's New iPhones: Should You Buy The Rumor And Sell The News? [View article]
    Please :-)
    Aug 20, 2013. 10:05 AM | Likes Like |Link to Comment
  • Apple $395: Time To Give Up And Abandon Ship? [View article]
    All depends on your investment system. People who bought when it was 10% or 20% undervalued, were too early. Depending on quality, once a company is 30% to 50% undervalued it is normally a great bet. And downside volatility becomes minimal.

    Trend following strategies like yours can also be a successful, though the issue remains that the beginning and ending of a trend are easy to spot only in hindsight, hence you tend to lose most on your entries and exits (false breakouts and retracements).

    Overall value investors have done better than trend followers with much lower volatility. This is because trendies enter on highs (such as breakouts) and exit on lows (breakdowns). Value investors generally enter on lows (though on a percentage of investments those lows get lower) and exit on highs.

    On a personal note, I combine a value approach with some technical analysis and I will be buying Apple (which in my mind is more than 30% undervalued) once the technicals confirm a bottom. There is no hurry, a bottom will take 3 to 7 weeks to form (and will most probably retest). Apple has been under distribution since February.
    Apr 24, 2013. 06:23 AM | Likes Like |Link to Comment
  • Apple $395: Time To Give Up And Abandon Ship? [View article]
    Truth be told few people (if any) can tell for how long an undervalued security will stay undervalued.

    My experience is that 80% of undervalued securities are revalued within 3 years and 95% within 6 years. However, there are some well known and well respected companies (e.g BRK) that can remain undervalued for over 10 years.

    Whilst it is a fact that Apple is undervalued by any metric anyone can throw, it may well be back in favour before EOY (and it is certainly a bet worth taking) but it may not.
    Apr 23, 2013. 07:55 AM | Likes Like |Link to Comment
  • Apple $395: Time To Give Up And Abandon Ship? [View article]
    Fortunately or unfortunately seeking alpha brings together a large number of market participants with vastly different investment/trading strategies.

    There are so many different ways to play Apple depending on strategy, skill, portfolio size and time horizon. Many of them will result in profitable calls others will lose money.

    Value investors: Apple in all probability is undervalued. Value investors are taking positions and will continue to buy as long as it remains undervalued (EV/EBTIDA is just 4). Regardless of whether it goes up or down after they buy.

    GARP investors will stay clear since growth is likely to be subdued over the next few years.

    Dividend investors should wait for a dividend increase or a clear dividend policy in which a percentage of its cash will be returned to shareholder in the form of buy backs or dividends. If the company decides to only keep enough cash required to support 25% RoE then their is plenty of cash available to distribute to shareholders.

    Speculators will take positions on anticipation of an increased dividend, or some other insight they have as to what will happen in the near future and how the market will react to it.

    Momentum traders/Trend followers will stay short until the trend has turned or until they have some signal that the current down trend is over. Personally I see many signs (rate of decline has slowed, accumulation has started).

    Chart readers/tape worms will be watching to see what type of consolidation base is being built around the $400 mark, what price range will be stablised over the next couple of weeks and reach a conclusion as to whether the breakout will be on the upside or downside and either buy in anticipation or wait for the breakout (or breakdown).

    Fact is for a stock that has run up from 100 to 700 in 3 years, a 30% to 50% retracement is quite normal and quite usual.
    Apr 21, 2013. 04:43 AM | Likes Like |Link to Comment
  • Apple $395: Time To Give Up And Abandon Ship? [View article]
    Apples EV/EBITDA is just 4. Most people would gladly pay 7 for a company with half its prospects.

    Even if its margins decline 35% it will be selling at a cheap price of 6.

    I don't know how far down Apple will go, but I'm more than certain that it will go back an EV/EBITDA above 7.

    In the short run the market is a voting machine, in the long run a weighing machine.
    Apr 19, 2013. 11:35 AM | 15 Likes Like |Link to Comment
  • Apple's Falling Share Price And The Market's Implicit Growth Implications [View article]
    Good article. I agree (sort of) with the price band - my band was $450 to $700, based on DCF - growth 2% to 8% which I believe incorporates 95% of likely outcomes. Though I suspect 3% to 6.5% would incorporate more than 80% probability.

    Those critical of a wide price range don't get that the range will be as wide as dictated by the probability distribution of the key variables. Otherwise you will fool yourself with precision that does not exist.

    Sorry to hear you will no longer be writing for SA.
    Jan 22, 2013. 09:11 AM | 1 Like Like |Link to Comment
  • Enough About Apple [View article]
    The critical question is whether or not Apple has a competitive advantage and if so how durable it is, if not then margins and return on assets will be eroded by competitive forces as is the case for all companies without some time of defensive.

    In my mind Apple's advantage is innovation, it it wasn't able to innovate better than competition it would not be in its current position. Traditionally consumer electronics is a no moat playing field, however Apple has managed to maintain a premium on Mac and interestingly on iPod for a very long time. What is funny about iPod is that competing mp3 players have consistently sold at about a quarter of the price.

    Only time will tell whether Apple's innovation is in its culture or in its late founder. Given its last stint without him the odds are that it was in the man and not the organisation. However, I am always eager to be proven wrong.

    The other thing worth thinking about is Apple's strategy. Apple has refused to put its nose in the low end, many (including myself) thought this would ultimately be a mistake (my reasoning was that in computing the winner goes to the firm with the biggest eco system and volume leadership was critical to maintaining a stronger eco system) as things have panned out I am now less sure.

    If Apple holds onto the top 25% of the market (where 80% of the money is spent) then the ecosystem remains strong because who wants to develop for people who stick mainly to the free version. At the same time Apple avoids the commoditisation, that normally happens as the consumer electronic product cycle matures.

    I have not the answer, but many of the questions and closely watch to see when Apple actually comes under pricing pressure as opposed to us all worrying that it will.

    I also watch the upgrade cycle, as many Apple users now have more than one Apple device and increasingly appear locked into iTunes (and in the future MAY become locked into cloud services.)

    I have Apple's and Androids, I love my Galaxy Note 2 - it has a great but still portable screen and is excellent for taking notes in meetings (which is actually more expensive than my iPhone 5) but my wife and kids continue to cling to their Apple's, one of the kids just 'upgraded' from an iPad to an iPad mini, even though she could pocket the 30% savings. The same decisions are being taken by millions of Apple customers every day.
    Dec 14, 2012. 10:41 AM | Likes Like |Link to Comment
  • The Real Reasons Why Apple Is Tanking [View article]
    The opportunity to buy the lows is fast receding. Apples technical action suggests that sellers are getting exhausted, they couldn't take out last weeks low on Wed, nor could they sell more volume on Wed than on 8 Nov (the height of the fear selling.) And indeed both lows (this week and last week) were followed by strong (and disciplined) accumulation.

    I will be surprised if Apple will be on sale again for below $520 and if you're really keen to be an owner I wouldn't balk at paying $550. Fact is no one knows at what price it will be offered, but it is clear that value buyers are all over it at $520 to $540.

    And since any fool who's spent more than a month analyzing stocks can tell you that it is worth more than $700. And it is well known that value buyers become interested from 20% to 30% below fair value. You go figure.

    I managed to replace my lost inventory at $535 yesterday (I sold half my position in Oct as I couldn't stand the pain of seeing my winnings shrinking so fast.)
    Dec 7, 2012. 06:31 AM | Likes Like |Link to Comment
  • The Real Reasons Why Apple Is Tanking [View article]
    Have you ever seen a companies share price go up after it reduced guidance.
    Dec 7, 2012. 05:41 AM | Likes Like |Link to Comment
  • Apple's Cash Position Is Overstated By $70 Billion [View article]
    The beauty of DCF valuations is that they appear so scientific and objective. Whereas just like everything else about the future they are just a guess.

    Bottom line, you are saying Apple should be trading at less than 12 times earnings because: i) revenue growth will slow to -5% in a couple of years and following that its competitive advantage is so weak that it will not even be able to keep up with inflation moving forward; ii) margins will decline because it will have to cut prices to fight competition and falling operator subsidies; iii) capex will increase (and this is the really ridiculous one) because they will have to spend more money to support their struggling suppliers to grow capacity, even though the growth is -5% and then just 2%.

    What your saying in effect is that apple is a broken company (declining real revenue, declining margins, increasing capital expenditure.) I don't buy it, I'll have to see it to believe it.

    Our worst case is revenue growth declining to 6%, margins down to 26% and capex flat (you won't need additional capex unless you get growth.) And a valuation of $600. Our better case scenario's value it at $800. Our expectation is that the value is somewhere in between. We don't know what the value is, nor in our opinion does anyone else, but I would wager than 90% of investors also have valuations somewhere between the two.

    I'd be a buyer below $550, a seller above $850 and a short seller above $1,000. I like to take bets where the odds are massively in my favor.

    Currently long AAPL.
    Oct 12, 2012. 05:31 AM | Likes Like |Link to Comment
  • When To Sell Apple? [View article]
    I didn't say it can't go higher. It can and it will, this is why I own it.

    I said that it will not have a significant multiple expansion. You can participate in the earnings growth, which is stellar.
    May 12, 2012. 03:53 AM | Likes Like |Link to Comment
  • When To Sell Apple? [View article]
    Most of the supposed criticisms of Apple do not show up in the shareholder record. Apple is owned by over 7,000 institutions.

    This is also the reason, despite its success, that it will remain undervalued (you can participate in the earnings expansion, but not a change of multiple.) It takes institutional buying to drive up the price of a large cap much above its 50MA for an extended period, and there's no one left to buy. Apple is not overbought. It is over owned.
    Jan 30, 2012. 05:09 PM | 2 Likes Like |Link to Comment
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