"Apple seems to be still targeting those concerned with the phone's cosmetics"
That quote is enough of a reason to disregard this article. Cosmetics has nothing to do with why Apple users stay loyal. In fact, if you're looking for cosmetics, I'd say all smartphones have been fairly competitive for a while now. I find articles which are based on such flawed assumptions very amusing, but definitely not helpful when it comes to investing. If someone based their strategy on this article's false assumptions, they might be in for a rude awakening.
Apple: Is It Really Too Cheap To Ignore? [View article]
there is nothing negative in the media about Apple. The negativity comes from financial sites and ridiculous analysts downgrading the stock because of supply issues and lack of product roll-out. I know a lot of Apple users. Maybe 1% of the people I've met ever go back to using PCs or alternatives to iPads and/or iPhones. There are some analysts I follow who are excellent. I probably have 1 or 2 in each industry that I trust. Majority of analysts, however, are terrible. They follow the markets. I'd call them "momentum" types.
Apple: Is It Really Too Cheap To Ignore? [View article]
First of all, I'll have to correct you. Apple was actually cheaper in 2000 and 2001. It was trading under 9x after the dot com bubble burst and after 9/11.
Second, Cook is doing plenty and he's doing just fine. Apple dominated the hardware market for years and people expected relatively very little from them while they dominated. In fact, the iPad was met with anger as analysts thought it would cannibalize much higher margins from notebooks. The stock dropped 10% on days following the release. They did NOT want Apple to innovate when the stock was doing well.
When Jobs came back to Apple in 1996, analysts hated him. The stock dropped 40% in the months following his return. Now, analysts hate Tim Cook and the stock dropped 40% after Jobs died.
See, it's not that Cook isn't doing something right. It's that there is an unreasonable and unjustified expectation from authors like you that cannot be met. Because you think you have more information than Apple, your approach is GIVE US MORE NOW OR ELSE whether or not its the right way forward for the company. I could honestly care less about the short term success of gamblers. I put my money on Tim Cook.
Investing In Apple: Risk Management 101 [View article]
By the way, saw this current earlier and wanted to comment on it:
"12:08 PM Google (GOOG +0.5%) has passed Apple (AAPL +0.3%) as the biggest holding among the top 50 actively-managed U.S. mutual funds, according to a Citi report. Google is also now the top holding among hedge funds - a slew of major hedge funds either pared back or fully unwound their Apple positions in Q4. After backing out net cash/investments, Google now trades at 15.5x 2013E EPS, and Apple at just 6.3x FY13E EPS."
This is a great example of where we are on the "investment cycle" with Google/Apple. This is where I think a sophisticated investor might start playing with a trailing stop on Google as I believe the risks are not worth paying for at this point. Apple on the other hand has similar risks and is extremely cheap relatively.
I think a good analogy to understand what the author did here would be to picture a house that is worth $400,000 today with $137,000 cash inside it and he's betting that the house is basically worth $250,000 because someone dumped some trash on the front yard. I mean, what we have here is insanity playing out, in my opinion. This article excites me because if someone is willing to sell me that house for $250k, I will lever up at the low rate, buy the house, and laugh the guy who sold it to me out of the room. Inefficiency is a good thing, ladies and gentlemen.
But your DCF is wrong. At an 8% discount and 1% growth your DCF should make Apple undervalued at a 9+ P/E.... I am not sure where you made your mistake, but some of the analysts on Wall Street assume no growth (vs. 1% growth) and their DCF spits out $500+.
Investing In Apple: Risk Management 101 [View article]
I am upset at myself that I didn't include this in my article. Your approach is absolutely correct. Dollar cost averaging is the ONLY way to go! Good job.
In terms of investment cycles, in 4Q12, every hedge fund was already in Apple (that you could track) and firms that usually trade on behalf of retail had enormous holdings of Apple. There is a way to quantify this by the way by looking at largest holdings on Bloomberg. I didn't do it for my article - Based it entirely on perception. I've been trading for a while and I follow some of the well known hedge fund guys - I form perceptions based on their moves. Good question though and I probably gave you a crappy response :)
Investing In Apple: Risk Management 101 [View article]
First of all, I never said their lab is full of new products. I said they have a lineup of products. And I BELIEVE that they do. There are plenty of leaks about some of the products in their labs on dedicated blogs.
Unethical? This is my view based on my understanding of their R&D. In absolute terms, they're one of the biggest spenders of R&D among any companies. They're joined by MSFT and GOOG of course. Apple is not paying its people billions of dollars to look pretty. If you don't believe Apple's R&D is managed well, then you have a different view than I. To say that my view is unethical is calling into question our freedom to express our views. I am not telling people to buy stocks here. I am explaining to people why I bought the stock. If you don't agree with me, then I respect that. But don't call me unethical.
Investing In Apple: Risk Management 101 [View article]
Thanks they actually were betting using call spreads. Consider this my correction :) Zaky, who I've followed in the past was consistently accurate during Apple's bull run. In fact, there were times when he believed Apple was unfairly priced. At $600, he believed they couldn't go any lower and told his investors to bet on call spreads. Since call spreads are levered, he believed they could maximize profits. You are absolutely right - gambling.
For anyone who wants to see what the DCF should actually look like using 1% growth, the link is below. Using the author's assumption of an 8% discount rate and 1% growth with 0 TV, the PT should be $575.35 not $265.8. Just a little mistake.
see comment below by Michael Nau. apparently your DCF analysis is wrong. anyway... i think you might consider contacting SA and asking them if you could edit your analysis here, especially since your work revolves around valuation of companies. good luck.
Has Samsung Dethroned Apple? [View article]
That quote is enough of a reason to disregard this article. Cosmetics has nothing to do with why Apple users stay loyal. In fact, if you're looking for cosmetics, I'd say all smartphones have been fairly competitive for a while now. I find articles which are based on such flawed assumptions very amusing, but definitely not helpful when it comes to investing. If someone based their strategy on this article's false assumptions, they might be in for a rude awakening.
Apple: Is It Really Too Cheap To Ignore? [View article]
Apple: Is It Really Too Cheap To Ignore? [View article]
Second, Cook is doing plenty and he's doing just fine. Apple dominated the hardware market for years and people expected relatively very little from them while they dominated. In fact, the iPad was met with anger as analysts thought it would cannibalize much higher margins from notebooks. The stock dropped 10% on days following the release. They did NOT want Apple to innovate when the stock was doing well.
When Jobs came back to Apple in 1996, analysts hated him. The stock dropped 40% in the months following his return. Now, analysts hate Tim Cook and the stock dropped 40% after Jobs died.
See, it's not that Cook isn't doing something right. It's that there is an unreasonable and unjustified expectation from authors like you that cannot be met. Because you think you have more information than Apple, your approach is GIVE US MORE NOW OR ELSE whether or not its the right way forward for the company. I could honestly care less about the short term success of gamblers. I put my money on Tim Cook.
Apple Is Worth $265 [View article]
Investing In Apple: Risk Management 101 [View article]
"12:08 PM Google (GOOG +0.5%) has passed Apple (AAPL +0.3%) as the biggest holding among the top 50 actively-managed U.S. mutual funds, according to a Citi report. Google is also now the top holding among hedge funds - a slew of major hedge funds either pared back or fully unwound their Apple positions in Q4. After backing out net cash/investments, Google now trades at 15.5x 2013E EPS, and Apple at just 6.3x FY13E EPS."
This is a great example of where we are on the "investment cycle" with Google/Apple. This is where I think a sophisticated investor might start playing with a trailing stop on Google as I believe the risks are not worth paying for at this point. Apple on the other hand has similar risks and is extremely cheap relatively.
It's Time For Apple To Buy BlackBerry [View article]
Apple Is Worth $265 [View article]
Apple Is Worth $265 [View article]
Investing In Apple: Risk Management 101 [View article]
In terms of investment cycles, in 4Q12, every hedge fund was already in Apple (that you could track) and firms that usually trade on behalf of retail had enormous holdings of Apple. There is a way to quantify this by the way by looking at largest holdings on Bloomberg. I didn't do it for my article - Based it entirely on perception. I've been trading for a while and I follow some of the well known hedge fund guys - I form perceptions based on their moves. Good question though and I probably gave you a crappy response :)
Investing In Apple: Risk Management 101 [View article]
Apple Is Worth $265 [View article]
Investing In Apple: Risk Management 101 [View article]
Unethical? This is my view based on my understanding of their R&D. In absolute terms, they're one of the biggest spenders of R&D among any companies. They're joined by MSFT and GOOG of course. Apple is not paying its people billions of dollars to look pretty. If you don't believe Apple's R&D is managed well, then you have a different view than I. To say that my view is unethical is calling into question our freedom to express our views. I am not telling people to buy stocks here. I am explaining to people why I bought the stock. If you don't agree with me, then I respect that. But don't call me unethical.
Investing In Apple: Risk Management 101 [View article]
Apple Is Worth $265 [View article]
Here it is:
http://bit.ly/XX2g7N
Apple Is Worth $265 [View article]