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Robert McDonald
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FROM INSIDE SILICON VALLEY: Sorting the truth or likely truth from the noise is a key attribute of the successful investor. My commentary is a distillation of some of this effort relative to particular stocks and investment areas. My publishing at this point in time is limited to the blogsphere,... More
    Nov 9, 2012 1:28 PM | about stocks: AAPL

    Folks are misinterpreting market share data. Samsung's smartphone gain is coming out of the hides of Nokia and RIMM not Apple. Both Apple and Samsung have huge growth rates. Net web traffic for iOS towers over Android which means the ecosystem is at play.

    We also had a temporary lull in iPhone sales due to iP5 introduction and in iPad due to pending iPad mini introduction. I too wanted to see what these products were like before making decisions. Now Apple is sold out on these new products and is just beginning to catch up with demand.

    Bottom line is Apple's share of the profit dollars for mobile web devices is still way over 50% and sales and earnings are still growing way more than 30%/year. Plus there is the matter of 2% dividend payments and $120B in cash and cash equivalents making this a value stock as well.

    The margin issue has been way overdone. Apple will be back up to high end margin rates post December and this will probably be discussed in the blowout January earnings report.

    It is only a matter of time before some event or news unleashes a whole new set of reports on this reality and the stock will take off like a shot again. Note only a small fraction of indie and pro-analysts are reducing share price targets, less than 10%, and the downgrades are small potatoes compared to the selloff.

    With a current trailing PE of 12 and forward PE of 7x (4x when if you back out cash and equivalents), this selloff is made for fools. Buy on this dip. Wake up or miss out. The slingshot has been pulled back yet a few more notches and you can imagine that the hedgies, Wall Street, 401K's with new funding, market makers and others on Wall Street will soon be all over this stock again.

    PS: Forgot to mention MSFT Win 8 phone and tablets. These products are way too late to market and are not consumer friendly. There are already Office Aps for iPad meeting some needs and Office will be ported to iOS in 2013 - Microsoft cannot afford to ignore this market, especially with so much uncertainty about the future of Windows PC's. Win 8 in the mobile web world will be a minority play, mostly in the enterprise not consumer.

    Disclosure: I am long AAPL.

    Stocks: AAPL
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Comments (3)
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  • Daya Baran
    , contributor
    Comments (29) | Send Message
    I think they have about 130 billion in cash. I think they should acknowledge the dividend was a mistake, kill it and use the funds to do a buy back.


    I am hearing many hedge funds actually lost money on Apple as the price kept going down. They had margin calls and had to sell.


    While hedgies were busy f'ing the retail investor, other hedgies were busy f'ing them, that is one of the reasons Apple went from 705 to 505. These guy have no scruples. They want to make money at any cost. In the end they make very little. The numbers might be large but as a percentage it's small.
    18 Nov 2012, 10:45 PM Reply Like
  • Robert McDonald
    , contributor
    Comments (1497) | Send Message
    Author’s reply » Thanks for comment Daya. I agree with everything you said. This is why Apple's volatility has gone through the roof and normal low hi expectations don't work anymore. Calling bottoms and ST actions has become a fools errand. I will do more long term trading action now. There is even more money to be made that way. My new strategy is to buy below TTM PE of 13 and sell above TTM PE of 17 using LEAPs -- giving up on long term capital gains treatment due to lost opportunity of >1 year holds. This correlates to what Zaky and Nansen and probably others have come to. Apple has become the best ever plaything out there for the hedgies and others on Wall Street. The smart investor adjusts accordingly. I'd appreciate any feedback you have on this.
    19 Nov 2012, 12:06 PM Reply Like
  • kimboslice
    , contributor
    Comments (1787) | Send Message
    How hedge funds could lose money on an awesome stock like AAPL is a reason why they don't matter to Apple management.
    3 Dec 2012, 01:40 PM Reply Like
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