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Jay Somaney is a partner and fund manager with TSG Capital Partners, a hedge fund based in Plano, Texas and writes Jay’s “So Money” Trading Diary on StockuVerse.com . Jay Somaney currently manages TSG Tech Fund, a hedge fund focused on the shares of companies involved in the Internet and related... More
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  • Whats Wrong With Apple? 0 comments
    Jun 18, 2013 6:43 PM | about stocks: BBRY, AAPL

    Will Apple (NASDAQ:AAPL) ever go up? Will it ever see all-time highs it saw late last year? AAPL is done with. Does Tim Cook know what he is doing? Does Tim Cook care about shareholders? Apple is a sell even now. Those are the questions and comments I am asked and hear from pretty much by everyone wherever I go once people find out what I do for a living.

    It sure seems that AAPL can do no right at the moment especially relative to how it could do no wrong till the fall of 2012. However, those sort of questions/comments are just scratching the surface stuff. Digging a bit deeper one can see a clearer picture emerge.

    First and foremost, blame it on the sellsiders who have totally turned tail, for the most part, after praising AAPL to the skies in the fall of 2012. Back then, four digit targets were being thrown around by the analysts like it was a guarantee. As Apple shares continued to get battered, the analysts headed for the hills and most of them are still up there somewhere. Interestingly enough one of the analysts was an intern of mine when I did a three year stint on the sellside. Many moons ago of course.

    Next we have Tim Cook. Is he a worthy successor to Steve Job? No one can fill Steve Jobs shoes and Cook has impossible odds against him. However, investors must remember that he was picked to lead Apple by Jobs himself so there must be something there although I don't see it at the moment. However, I am not Steve Jobs otherwise you would not be reading this article. Having said that, as an investor, I am appalled at how bland Tim Cook comes across. He is after all a supply chain expert and maybe, just maybe, being the CEO of one of the highest profile companies on planet earth is a bit beyond his technocratic abilities. Most of the times he comes across as supercilious at best and a power mad geek at worst. His public interaction has left me totally unimpressed as of now. Please remember that I am a fan of Tim Cook if only for the fact that he was hand-picked by Steve Jobs to carry on the journey at Apple. I think the best thing that Cook can do at present is keep his finger on the buy tab (share buyback of $60 billion) at these levels and limit his appearances at public events for now.

    Another issue that is holding back AAPL is the fact that the competition, like Samsung (OTC:SSNLF), Blackberry (NASDAQ:BBRY) et al have been rolling out one product after the other while AAPL seems to be resting on its laurels with products that are rather dated despite the recent upgrades (excellent IMO) to the operating system and the rest. So, to many, it seems like the company has stopped innovating. Again, nothing is further from the truth. Apple is getting ready to roll out a slew of products over the next few quarters that will be game changers.

    There are a host of other issues that are plaguing AAPL at the moment, most of which are not really worth wasting digital "ink" on. Issues like margins, lack of demand, et al. All bogus if one goes by what I see and hear about Apple products here in Bombay. Apple is a status symbol here in India whether one is talking about smartphones, laptops, desktops and soon tvs and phablets and watches and who knows what else.

    So, for now stay the course. If you are investing in options, give yourself plenty of time and then add a few more months to the expiration or just buy the shares and you will be smiling this time next year.

    Disclosure: I am long AAPL, BBRY, OTC:SSNLF. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

    Additional disclosure: long aapl leaps, short aapl weeklies

    Themes: long-ideas Stocks: BBRY, AAPL
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