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Mark Yagalla founded Ashbury Capital and APEX Investments in the 1990s when he was just a teenager. After making his first $1 million at 19, he dropped out of the Wharton School at the University of Pennsylvania and went to Wall Street. While working on Wall Street, Mark successfully raised $50... More
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  • Apple Has A PR Problem 0 comments
    Apr 18, 2013 4:00 PM | about stocks: AAPL

    I read the other Seekingalpha articles and the numerous comments left for each. Every single bull, not bear, wants to scream at the top of their lungs about what a great company Apple (NASDAQ:AAPL) is and how cheap the stock is. Unfortunately, the only voice that matters in that regard is Tim Cook's and he's not saying anything.

    I've been asked before what makes a great CEO. To me it's the person that is best going to promote the company. You can go to any business school and get a CFO, operations guy, etc. But the guy that go out and tell the company's story to Wall Street is the company that I want to be invested in. Everyone says that Steve Jobs was a visionary, etc. Now I'm not arguing that point, but I think more important he was a promoter for Apple and Apple stock. He was the company's biggest cheerleader. Every product launch was a choreographed marketing event to create interest in not only the company's products, but the stock.

    In Walter Isaacson's book on Steve Jobs we learned that one of his best friends from his days at Reed College was Robert Friedland, or "Toxic Bob" to those in the mining circles. Bob Friedland is the quintessential Vancouver stock promoter who built Ivanhoe Mines into a multi-billion dollar company. Bob was a salesmen. He knew that when you were raising money, how you told the story was more important than anything else. His role as CEO was to promote his company and his mines. Operation guys stayed behind the scenes and out of the picture building the business.

    Besides Friedland if we look at other successful stocks, we see that a large part was because of the CEO's role in promoting the company. Another great example is Warren Buffett and Berkshire Hathaway. Mr. Buffett is constantly on television and in the press giving interviews about his strategies and thoughts. That gives relief to investors that the CEO is talking to them. We can't actually call up Tim Cook or Warren Buffett, but we want to hear what they have to say. That calms the market and I have to say, keeps the stock price up. That is why there's the Buffett premium in Berkshire Hathaway stock.

    Which leads me to the biggest worry about Apple, how much was the Jobs premium in Apple? By looking at the market right now, it appears to be $300 a share. Now we know that Steve Jobs turned Apple around and was the visionary behind the company, but $300 per share? Over the past 5 years, all the key people on Apple products are still there. Besides the unfortunate death of Steve Jobs, all of the key players stayed.

    Why I Still Wouldn't Bet Against Apple

    Answer: $150 billion and growing every day! Apple has more cash on had than the Federal government. At some point Apple is going to deploy that cash and it's going to send the stock higher. Tim Cook is not stupid. He does know what he's doing. He just isn't Steve Jobs and that's what's hurting Apple right now.

    If Tim Cook gave an interview on where Apple is heading; projects in the pipeline; plans for cash; and quit being so secretive, the stock would fly. The reality is we don't know anything on what's going on at Apple. Now some can say we didn't know either when Steve Jobs was in charge, but in Steve we believed. With Tim Cook, he hasn't given us a reason to believe yet.

    But all is not yet lost. Apple has a phenomenal business. According to Interbrand, it is the 2nd most valuable brand in the world after Coca-Cola. Their customers and I would say most retail shareholders are extremely loyal. Apple and Tim Cook need to do a little PR and realize that they have to market themselves. Worst case I hope they realize how cheap their stock is and do a stock buyback. That would be the wisest use of Apple's cash right now. Margins and sales growth can't necessarily be controlled, but a company that has the ability to spend $150 billion today is not a company I would bet against.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. 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.

    Themes: long-ideas Stocks: AAPL
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