Seeking Alpha

Michael Nau

 
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  • Demographics, Manias And The Short Case For Apple Explained [View article]
    Michael, I've come around to your point of view having sold AAPL for a moderate gain a while back. Wish I had held on a bit longer.

    I think you are right in the long term, but in the short-to-medium term who knows about AAPL's price.
    Dec 3 10:33 AM | Likes Like |Link to Comment
  • Emerging Competition Threatens Apple In 2014 [View article]
    Michael, you are my favorite AAPL bear, I always enjoy reading your articles. I think you've laid out the bear case pretty clearly, but I think you are a bit too pessimistic. Here's my rebuttals:

    1.) I don't put a whole lot of stock in market share or revenues, I'm more interested in earnings and free cash flow. Otherwise, I'd buy AMZN. EPS has declined somewhat in the last year, but FCF is highest ever for a September quarter. It seems clear to me that while growth might be slowing down, AAPL is a cash machine.

    2.) The zero growth on tablets figure isn't entirely fair considering the product cycle. I'd expect growth with the next product refresh.

    3.) You are right to be skeptical about AAPL coming up with the "next big thing". That is quite difficult to do. But it is clear that the company might. I'd say that such an option on future products is worth a non-trivial amount, but that the current market is giving this optionality $0 value considering its cash and slow-growth existing businesses.

    4.) AAPL is able to fund its capital return program almost entirely out of FCF. This will leave most of the cash pile intact yet will reduce the float by 20%-25% in the next year and a half. AAPL will be able to drive EPS growth out of buybacks without having to mortgage much more of its fortress balance sheet.

    So I've concluded for now that the glass is half full, but it is good to hear an opposing point of view.
    Oct 31 06:06 PM | 7 Likes Like |Link to Comment
  • Apple Should Not Give In To Icahn [View article]
    I'm an AAPL shareholder with a 3-5 year time horizon, and I'd be glad to see a larger buyback. Right now, the market cap is $440B with $140B+ in cash and $17B in debt. The current buyback can be mostly funded by current operating income without dipping much into the cash. So the real question is whether AAPL needs $120B+ in net cash going forward.

    I don't think so. Big ticket acquisitions tend to destroy more value than buybacks. I think the long-term prospects for investors depend more upon current optimal capital allocation than companywide growth. After all, I don't own the whole company, I own shares. Those shares can still go up in value if growth is stagnant provided management grows my share of the pie.
    Oct 1 02:50 PM | 6 Likes Like |Link to Comment
  • Apple: Please Quit Your Whining [View article]
    More people have istuff than Ferraris, I don't believe this is an apt comparison.
    Sep 13 08:32 AM | 1 Like Like |Link to Comment
  • Apple $700: Don't Get Burned Again [View article]
    Dividend + buybacks = 10% effective yield. So I'm OK if the stock doesn't move for a while.
    Aug 19 08:11 AM | 27 Likes Like |Link to Comment
  • Is Apple Making A Comeback? A Historical Perspective [View article]
    I'd like to see predictions of bubbles going forward, its a higher bar than backtesting.....
    Aug 7 03:47 PM | 2 Likes Like |Link to Comment
  • Is Apple Vulnerable To A Bond Crash? [View article]
    Interesting point, I agree that all this cash hoarding will likely prove to have not been so wise.

    To put the argument in perspective, however, AAPL's $17B bond issue is essentially an interest rate short play. Along with selling bonds to finance buybacks and dividends, I wouldn't be surprised if AAPL's interest rate risk has come down a lot since last quarter and that this trend will continue in the coming quarters.
    Jun 20 08:52 AM | Likes Like |Link to Comment
  • Applephoria Is Translating Into Lost Opportunities For Investors [View article]
    Kinda hope AAPL doesn't rebound in the fall, I'd like more of the buyback to take place at a low cost first.

    Long AAPL
    Jun 19 07:52 PM | Likes Like |Link to Comment
  • Analysts Slowly Sour On Apple [View article]
    not a bad idea.
    Jun 18 01:08 PM | Likes Like |Link to Comment
  • Apple's Upcoming Products - Is It Time To Buy? [View article]
    With the $100B capital return plan and $44B in annual FCF, AAPL could reduce its float by 50% in 2 years. I wouldn't mess with that.
    Jun 9 01:16 AM | Likes Like |Link to Comment
  • Apple Is Fundamentally A Value Buy Even With 50% Drop In Earnings [View article]
    I totally agree that AAPL is a great value. Additionally, the $100B capital return plan provides a further buffer on returns in the next few years.
    Jun 7 09:00 AM | 3 Likes Like |Link to Comment
  • Pricing Apple's Uncertain Future: A Scenario Model [View article]
    As AAPL longs, we should be glad that the market is discounting AAPL. $60B in buybacks will go a lot further if the stock remains depressed for a while.
    May 25 10:16 PM | 1 Like Like |Link to Comment
  • The Truth Behind Apple's Numbers [View article]
    So you think AAPL is worth maybe $200 or $250 per share. That's something like $100-$150 per share ex-cash adjusting for taxes. Which means that the underling business should trade at a p/e 2-4 while yielding 8%-12%.

    My eyebrow is definitely raised.

    Long AAPL.
    May 23 06:47 PM | 20 Likes Like |Link to Comment
  • Tim Cook's Improbable Victory In Washington [View article]
    The problem with these shenanigans is that it makes the playing field unfair.

    I'd love to create a shell company in Ireland, sell it the rights to all future paychecks in exchange for non-dividend paying stock and then take out monthly "loans" from my shell company the size of my paycheck, and then periodically have the company write-off the loans to obtain a tax asset for a subsidiary that could be sold to a real company. But then again, if I did that, I would pay no income taxes. If everyone did that, we wouldn't have roads.
    May 22 04:49 PM | 12 Likes Like |Link to Comment
  • How Much Is Apple's Cash Really Worth? [View article]
    Excellent article, a balanced and rational look at different cash policy alternatives. Personally, I'm in the "bring home now" camp, because I think that in a period of government austerity, Bush-era tax holidays are much more politically difficult to enact.

    Except for diehard conservatives, which politician wants to be accused of giving AAPL a freebie while slashing grandma's Social Security and Medicare? Sounds like a loser in the court of public opinion to me, regardless of whether you think it is wise policy.

    So given that I expect no ways for AAPL to wiggle out of paying taxes on foreign cash, I'd just as soon have it all go to repurchases now because AAPL is a better investment than money market funds.

    Long AAPL
    May 12 11:50 AM | 2 Likes Like |Link to Comment
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