Worrying Wednesday: How Low Can Apple Go? [View article]
Funny to see these comments from a couple months ago. If my time machine wasn't in the shop, I'd write a post about how the stock is not yet done dropping, that that it will end up at around $420 in late February/early March. It closed at 452 today, and I took a long position at $453 a couple months ago. I think most people would agree that based on fundamentals and even with a 0 growth assumption, this stock is undervalued. The low pricing is taking into account the market's concern that a serious decline in growth is coming, like something devastating. Every day, there's a new article written about how awesome Samsung is, and how apple is falling behind. My personal opinion is that Samsung makes a great product and is a great competitor, but it doesn't seem plausible to me that iphones are just going to stop selling, or even abruptly stop growing altogether. I believe the rate of growth will slow, that makes sense considering how impressive past growth has been, but 0 growth seems... a little overly dramatic and pessimistic. If you agree with me on that, you should be long apple. If you think apple products are that far behind, and expect iphones to sink into total oblivion, then stay away or short it I guess. Time will tell
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. [View news story]
obviously google is awesome so it should trade at P/E of 999999. Apple sux tho, so it should trade at P/E of 1. shorting Aapl until it hits $45 per share, and going long on Goog until it's worth $eleventy billion per share.
Mr. Market Should Be Looking At Apple's Cash Flow Rather Than Its Profits [View article]
Calculated FCFF to be $55,401 mil for eoy2012. - with growth rate of 0, and WACC of 12%, firm PV is $456,547 - divide that by 936.8 shares outstanding - stock price is $487.24 under these assumptions
Obviously these are some pretty damning assumptions though; 12% WACC is prohibitive, 0 growth is harsh and unlikely, but I guess the market thinks it will actually shrink, based on the current share price and this hefty discount rate. Basically this math shows numerically what you should be reasoning qualitatively anyway: if you think aapl can at least maintain its earnings at steady levels, go long on it. if you think it will shrink significantly, go short on it.
FCFF math: 55401 = CFO - Gross Fixed Capital investment + interestexp*(1-T) = 56,728 - (23,200 -21,900) + 0 (no debt or interest expense)
Worrying Wednesday: How Low Can Apple Go? [View article]
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. [View news story]
Mr. Market Should Be Looking At Apple's Cash Flow Rather Than Its Profits [View article]
- with growth rate of 0, and WACC of 12%, firm PV is $456,547
- divide that by 936.8 shares outstanding
- stock price is $487.24 under these assumptions
Obviously these are some pretty damning assumptions though; 12% WACC is prohibitive, 0 growth is harsh and unlikely, but I guess the market thinks it will actually shrink, based on the current share price and this hefty discount rate. Basically this math shows numerically what you should be reasoning qualitatively anyway: if you think aapl can at least maintain its earnings at steady levels, go long on it. if you think it will shrink significantly, go short on it.
FCFF math:
55401 = CFO - Gross Fixed Capital investment + interestexp*(1-T)
= 56,728 - (23,200 -21,900) + 0 (no debt or interest expense)
What Will Fix Apple's Declining Shares? Patience, Time, And Faith In Management [View article]