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Andy Zaky

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  • Apple: Learn From Andy Zaky's Mistake [View article]
    Did you ever do any of your own research on the matter? Because you, like several others who decided to comment on the subject, have zero idea as to what the hell you're talking about. BC Capital was a derivative fund meant to be a very small portion of one's total investment in Apple -- not their investable assets. Just their Apple positions. The fund was aimed at high net-worth investors that wanted to leverage a portion of their sizable Apple position. It was not a U.S. Long-Short fund or a traditional hedge fund. Though we do run a long-short model that is up well over 60% over the past few years and is outperforming the market.

    The problem is, no one stops to ask the questions, jumps to insane conclusions, and merely just thinks they know what they're talking about. Do some research before deciding to go on a smear campaign. There were people in the fund who invested 5-7% of their investment in just Apple. We're not talking their investable assets. Just 5-7% of their Apple-specific invest.

    Not all funds are U.S. long-short equity funds. There are all types of different funds. Some are derivative funds. That's what we held ourselves out to be and that's precisely what we were. Using the "term" hedge fund implies we were a long-short diversified fund. We were not a long-short fund and that was published in our Form ADV and was clearly disclosed to our clients. In fact, all of our clients knew the risks involved, understood and had experience with options, and wanted the extra leverage on the margins of their positions. Some clients were fund of funds and other funds.

    Did you ever ask the question: How is Andy Zaky doing in his long-short approach or his other portfolios that are not leveraged portfolios? Because we're outperforming. We outperformed in 2011, 2012, 2013 and we're outperforming this year as well. So please do some research before you open your big mouth next time. We didn't "just" get lucky on a few trades. We got blindsided by a 40% crash in Apple as did mostly everyone else. That's it.

    Oh and just for the record, we were clear with our subscribers on numerous occasions that the portfolios were meant to be a small portion of each investor's investable assets. On at least 20 different occasions when asked we were clear that people shouldn't really invest more than 10% following our derivative model portfolios. The problem is that a number of people decided to go in with much larger amounts of money -- given the multi-year success of the portfolio -- and when things didn't work out, they laid the blame 100% on our shoulders as if we told them to step in and invest 20-50-100% of their assets. Even Fortune concedes that point by quoting a subscriber who noted that BC stated that people shouldn't invest more than 10% in options but a lot of subs ignored that. How is that exactly our fault?

    Again, do some critical thinking of your own before jumping to conclusions and ask questions before sitting down to write an article about a story you know absolutely nothing about.
    Mar 25 01:57 AM | 1 Like Like |Link to Comment
  • At Best, Apple Is Trading At Fair Value [View article]
    Suppose Apple's cash rises to such a degree as to make up 130% of its market capitalization. What should Apple's P/E ratio be based on your thesis?

    Suppose 20 years from now Amazon makes $1 trillion in revenues, but produces $1 million in net income -- and has had flat bottom line growth for a decade. What should Amazon's market capitalization be? What should it's P/E ratio be?

    Suppose company BVSCP (made up name) produces $30 million in revenues and manages to push $28 million of that to the bottom line. Two years ago the company grew its revenues and earnings at a pace of 100% and last year it grew at a pace of 50%. This year it is expected to grow at another 65%. Which company should have a higher P/E ratio? Amazon with $1 trillion in revenues ($1 million in net income) or BVSCP with a 93% profit margin and a 50%+ growth rate?

    What this should illustrate is that you can't be so simplistic in the analysis. Different companies warrant different valuations based on different things. Amazon under the scenario I outlined would trade at a 10,000 P/E ratio+ and no one would bat an eye because you wouldn't value a company producing $1 trillion in revenues with flat-line growth and no real net income at a 20 P/E ratio because that's "fair value."

    You cannot look at Apple without considering it's cash flow, expectation for future growth and expectation for future cash flows. That's idiotic.
    Mar 20 12:26 AM | 3 Likes Like |Link to Comment
  • Bullish Cross Initiates Fourth-Ever Buy Rating on Apple [View article]
    By the way, just for the record, we did in fact clear our 500% gain that we outlined above.
    May 22 02:35 AM | 2 Likes Like |Link to Comment
  • How To Properly Use Apple's Guidance To Accurately Forecast Earnings [View article]
    The only thing I can really say is that I think you should just stop reading what I write because you obviously don't know how to interpret the following sentence. And if that's the case, then there is really nothing else I can do for someone who simply cannot comprehend such a simple idea:

    "It's important to understand that investors should view the Bullish Cross “official” outlook this quarter as being merely the lower boundary but we believe there is a MUCH HIGHER LIKELIHOOD that Apple will report in-line with our high-point forecast."

    What can't you understand about "MUCH HIGHER LIKELIHOOD?" Do you simply not get it that we do have to give an official outlook that is purposefully conservative?

    Are you really that obtuse? Really just stop reading my commentary. It really won't do you any good because you can't juggle very simple concepts that everyone seems to understand very well. So just move on. There are plenty of other good analysts to read and you simply can't read between the lines. So forget about it.

    Our official outlook is not what we believe Apple will report, it is what we have to conservatively publish. Do you really believe that Gene Munster actually believes the forecast he has to publish?

    Gene Munster knows that Apple is going to report $45 billion. He just has to give an estimate that is conservative because he has to do so given his position. His firm has to be conservative. So they give an estimate that is below their actual belief. That's why you will see him give an official estimate of 30 million iPhones on the one hand and then come out and say in public, "Hey Apple is going to sell 35 million iPhones by the way."

    Only a moron doesn't understand what's going on there.
    Jan 25 04:00 PM | 1 Like Like |Link to Comment
  • How To Properly Use Apple's Guidance To Accurately Forecast Earnings [View article]
    I'm just saying. We clearly indicated that our lower boundary estimates were $42b $11.75 and that we felt it was "more likely" that Apple would report $45 and $12.80.

    You come in here after a month just to post that we missed by 10%. I'm stating that only someone simple minded seeing things only from one side of the spectrum would make such a statement.

    We put two numbers out not because we don't believe our own words, but because we have to both have to be conservative and realistic. Conservative demands we give our lower boundary estimate. Realistic demands that we say what we think is most likely. Just because you have significant difficultly understanding that, doesn't mean we missed by 10%.

    That's your problem. I'm done dealing with you.
    Jan 25 12:57 PM | 2 Likes Like |Link to Comment
  • How To Properly Use Apple's Guidance To Accurately Forecast Earnings [View article]
    Did I miss revenue by 10%? I'm not sure how well you interpret things, but read the following which has been on the front page of Bullish Cross since December 16 and you tell me if I missed revenue by 10%:

    http://bit.ly/wHYP9e
    "Now it is important to understand that investors should view the Bullish Cross “official” outlook this quarter as being merely the lower boundary of what one should reasonably expect Apple to report. While we think there’s a significant chance that Apple will end up reporting $11.75 in EPS on $42 billion in revenue, we still believe that there’s a much higher likelihood that Apple will report a quarter that is more in-line with the outlook presented by my colleague at Asymco, Horace Dediu. Horace Dediu is one of the best analysts out there, is one of the leading experts on the global smart-phnoe market, and is a testament to his Alma Mater, the Harvard Business School.

    Dediu has put together an expectation that is very much in-line with the Bullish Cross “high-point” forecast for Apple. Our “high-point” forecast is an expectation we put out every quarter that takes into account the possibility that Apple could deliver a perfect quarter. Notice that Apple has delivered a report that was in-line or slightly above the Bullish Cross high-point estimate twice in the past two years. Once in fiscal Q2 2010 and again in fiscal Q3 2011. Both times it resulted in Apple gapping up uncontrollably after being unhalted in after-hours. The table below outlines the Bullish Cross High-Point Outlook:"

    High Point Forecast:
    Revenue: $45.14 billion
    EPS: $12.90

    There's a difference between setting expectations at the "lower boundary" and stating plain as day what we think is going to happen.

    ONLY THE SIMPLE MINDED can't see what we're doing here.
    Jan 25 10:47 AM | 2 Likes Like |Link to Comment
  • Some Context For Apple's Massive Numbers [View article]
    True that was our estimate. But then again we also did note the following:

    Apple Fiscal Q1: The Biggest Blowout in History
    http://bit.ly/wHYP9e

    Now it is important to understand that investors should view the Bullish Cross “official” outlook this quarter as being merely the lower boundary of what one should reasonably expect Apple to report. While we think there’s a significant chance that Apple will end up reporting $11.75 in EPS on $42 billion in revenue, we still believe that there’s a much higher likelihood that Apple will report a quarter that is more in-line with the outlook presented by my colleague at Asymco, Horace Dediu. Horace Dediu is one of the best analysts out there, is one of the leading experts on the global smart-phnoe market, and is a testament to his Alma Mater, the Harvard Business School.

    Dediu has put together an expectation that is very much in-line with the Bullish Cross “high-point” forecast for Apple. Our “high-point” forecast is an expectation we put out every quarter that takes into account the possibility that Apple could deliver a perfect quarter. Notice that Apple has delivered a report that was in-line or slightly above the Bullish Cross high-point estimate twice in the past two years. Once in fiscal Q2 2010 and again in fiscal Q3 2011. Both times it resulted in Apple gapping up uncontrollably after being unhalted in after-hours. The table below outlines the Bullish Cross High-Point Outlook:

    Our high-point outlook was $12.80 in EPS on $45.140 billion in revenue.

    If Apple didn't miss last quarter, we would have published that as our official estimate. But we simply had to allow Apple to completely decimate for a quarter before we get aggressive again.

    So on the one hand. Apple reported closer to what we actually believed they would report. But on the other hand, we had to "officially" hold an $11.75 EPS estimate. But most of our subscriber don't really believe that I actually believed that Apple would only report $11.75 in EPS. That was our lower boundary line.

    So it was a highly political issue. We issued the lower boundary as our official estimate.

    It kind of sucks because we get no glory or recognition because we basically had to do this as it was the responsible thing to do. We did a lot of hard work to come up with an estimate that we believe in and really couldn't publish it.

    So I sort of have to play the whole "whisper numbers" thing that Wall Street analysts have to play and we will probably never give another real official estimate that will put us at #1 ever again.

    We're just not in a position anymore that will allow us to just do that. We have to be ultra conservative.

    But that doesn't mean we can't publish a "high-point" estimate that tells people, "ok look. Here's what we really believe."

    That's why we said, "Now it is important to understand that investors should view the Bullish Cross “official” outlook this quarter as being merely the lower boundary of what one should reasonably expect Apple to report. While we think there’s a significant chance that Apple will end up reporting $11.75 in EPS on $42 billion in revenue, we still believe that there’s a much higher likelihood that Apple will report a quarter that is more in-line with the outlook presented by my colleague at Asymco, Horace Dediu."

    By the way, Apple reported $660.0 in iPhone ASP. I know you had asked me about that. They reported pretty much a few dollars above our expectations on APS.
    Jan 25 02:10 AM | 5 Likes Like |Link to Comment
  • Apple's Bullish Guidance [View article]
    Stephen -- On November 28, 2011, you published an article entitled, "Apple May Have Scrapped Its Low-Ball Guidance Strategy." In this piece, you argue that $9.99 in EPS is the most likely target while giving a cop-out range of almost $3.00 saying that Apple will probably report $8.71 to $11.29.

    Pretty pathetic. That's like saying, Apple will probably earn between $30 billion in revenue $50 billion in revenue. Great analysis. How useful.

    Then after I pointed out why your analysis is pretty much worthless for the most obvious reasons, you come out and say with such confidence:

    "Andy, Don't take this personally, but your going to miss earnings and revenue. Your namers are too high. Please do promise me this: When you do miss, stop crowing about yourself."

    So after I show gaping holes in your analysis -- and they were pretty huge -- you decide to attack me personally.

    So what are you going to do on Tuesday when Apple reports above your $3.00 range and nearly $2.00 above your EPS expectations. Are you still going to sit there and publish this drivel?

    Will you at least own up to the fact that you got bitch-slapped? Or will you hide in a pool of your own cowardice?

    After making a statement like that, I hope you man up and apologize. Mostly because while I've merely attacked your analysis, you've decided to attack me personally.
    Jan 21 11:09 PM | 1 Like Like |Link to Comment
  • Apple Fiscal Q1 2012: The Biggest Earnings Blowout In History? [View article]
    Kenneth explain to me how Apple is trading at around $400 a share right now when it was trading at $80.00 during the financial crisis. That's 5x higher than it was in 2009. The S&P 500 is barely up 100% during the same period.

    Apple goes in phases of consolidation for 6-months ahead of another major leg up. We're nearing the end of that consolidation phase. I know precisely what I'm talking about. Apple's next leg is pretty imminent. Now if everyone wants to cling on to this very asinine notion that "they want to keep Apple down," then that's your bad. The fact of the matter is, Apple doesn't go straight up. I moves up in legs. The next leg will begin by January.
    Dec 18 02:22 PM | 6 Likes Like |Link to Comment
  • Apple Fiscal Q1 2012: The Biggest Earnings Blowout In History? [View article]
    I'm still young so I "can be excused for not knowing how or why Wall Street truly works." That's funny. You obviously know very little about me. I would be truly impressed if you come here and apologize after Apple reports fiscal Q1.
    Dec 16 07:29 PM | 13 Likes Like |Link to Comment
  • Apple Fiscal Q1 2012: The Biggest Earnings Blowout In History? [View article]
    Notice most of the comments here are rather bearish. My point exactly. People are going to get epically blindsided this quarter. Even when I publish the numbers, people still don't get it.
    Dec 16 07:25 PM | 11 Likes Like |Link to Comment
  • How To Properly Use Apple's Guidance To Accurately Forecast Earnings [View article]
    "it can follow any rules it wants in providing guidance (though it will hurt itself in the financial community by doing so, as it's guidance will then be ignored)."

    When I read stuff like this, it really makes me believe that I work in an industry full of people who know very little about what they do.

    I guess you probably don't know much about Enron, Arthur Anderson, Worldcom and the resulting regulations on GAAP accounting.

    This statement pretty much demonstrates that you don't know much of anything and yet you have "to read this closer" because YOU believe that YOU are in a position to be able to judge whether I've made a few major mistakes. Oh the irony.
    Dec 14 04:15 AM | 1 Like Like |Link to Comment
  • How To Properly Use Apple's Guidance To Accurately Forecast Earnings [View article]
    Nope. Just don't want to be attacked personally. I attack other people's analysis when they do a piss-poor job. But I don't attack them personally.
    Dec 13 04:14 PM | Likes Like |Link to Comment
  • How To Properly Use Apple's Guidance To Accurately Forecast Earnings [View article]
    Oh god. Can you bring up one point at all about the analysis without attacking me personally? Of course not. You're just another coward that attacks people from behind a moniker.
    Dec 13 03:27 PM | 1 Like Like |Link to Comment
  • Apple's Bullish Guidance [View article]
    Sorry. Saying that we were accurate doesn't equate to saying that we are better than everyone else. If you can't see the difference, then that's my not problem.

    Not going to really get into this. The analysis is there. The evidence is there. If you want to look up my track record, it's also there in the public realm. A few searches and you will find it.
    Dec 13 02:20 PM | Likes Like |Link to Comment
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