Timeline Strategy Consulting

Hedge Fund Tracking: Bruce Kovner's Caxton Associates, Q3 2008

I reached this page via the AAPL finance page, and I am an AAPL investor (currently unresolved on AAPL short term but long in the long term).

Can anyone please tell me why all of these hedge funds have tended to reduce or remove AAPL positions? I can imagine that they were shorting it when it was $170+, but why they are not long now, at least with some small % positions, is not clear.

Any thoughts?

Awaiting Apple Earnings and Guidance

One more thing.....just suppose if Apple continues to hit earnings and has a reasonable or even strong holiday season. Let's assume this is possible based upon crowds (actually buying) at the stores and the sheer number of iPhones flying out the doors. Let's say the market gets a little smarter and recognizes that some companies in the market, especially tech, are better equipped to serve and therefore to resemble the bimodal distribution of the population as a whole. The downturn will affect the left hump, who see their wages and buying power stagnate. The right curve will see little if any decrease in buying power. Everyone is aware of the shrinking middle class in U.S. demographics, but where do they shrink? In rural areas, the South, lower Midwest, etc. they join the left hump. In cities and in the service economy that supports cities, they join the right hump.

Apple doesn't serve all markets equally, never has.

In other words, could companies like Apple actually receive disproportional valuation as investor money floods from companies like Dell, HP, etc. into Apple?

Just a thought. If you've followed the campaign this year you may observe that class warfare has been simmering below the surface. Apple doesn't cause that but could benefit from it.

Awaiting Apple Earnings and Guidance

@ Roger...I don't believe that Apple would announce a stock buyback plan. It's not their style for the following reason. When MSFT announced their plan, what they are essentially saying is that as a going concern business, there is no better use for that cash than to artificially increase the share price by taking some shares off the table. In other words, MSFT doesn't see the future growth if they were to hire programmers, build manufacturing locations, etc. to be as useful to increase future earnings as simply spending the money to reduce shares in play over the next 5 years.

Apple, on the other hand, could make higher use of this cash because they are: (1) in a different growth phase than cash cow MSFT; and (2) because they actually produce hardware could invest in production; and (3) they can invest in sales, retail locations etc. In fact, if you find the 'brick' rumor (novel production of aluminum cases in Apple manufacturing facility) plausible, then this could be a higher use of their cash.

We'll see. Although I'm very long Apple the market is throwing out the baby with the bathwater at this point. Apple does have one advantage that most people overlook, and that is that there is a market sweet spot that is if anything increasing its purchase of gadgets, and they don't want Dell stuff. We'll see.