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  • Apple Fire Sale: Part 2 - The Rocket Blast [View article]
    j.m. manness - nice article and many have come forward with similar predictions all relating to the capital gains issue.

    However, I think you overestimate the initial period leading into 2013.

    If I sold the stock to record a capital gain, I can immediately rebuy it. I don't have to wait till Jan 2nd. The wash sale rule only applies to losses.

    So if people sold the stock because of capital gains, why did they not rebuy immediately? Because they are magically waiting for Jan 2nd to come? Which means what?

    No - here your thesis falls short.

    People have not repurchased immediately because of four major factors:

    1. fiscal cliff uncertainty can cause all stocks to go down, including apple.

    2. the technicals for apple the last 2 weeks are absolutely atrocious. "Death Cross", MACD fast below the low, price below PSAR. the list goes on and on. Unfortunately retail investors like us won't affect the stock price. When hedge funds see these technicals, they hope, and even facilitate larger price drops where they can get back into apple at even cheaper prices than they sold.

    3. earnings uncertainty - most people would say that apple will at least meet wall street expectations, possibly even beat by 20 - 40%. In fact, most will expect that. a $15.00 eps may actually be perceived as a miss. But the larger issue will be the analysis of the margins. There is still significant risk that apple's cheaper offerings of older models (phones, ipads, minis) could significantly damper margins and cannibalize future growth.

    4. capital deployment strategy uncertain -> unfortunately there is no longer a clear strategy on how apple should return value to the shareholders. Dividends will become hugely tax inefficient and additional announcement of buybacks is not easy for a stock like apple to execute.

    I am no doubt an apple bull. I just think the time frame to get back to 700 to 750 could be longer (March - June).

    I expect apple to trade between 500 - 560 until a week before earnings. after earnings anything can happen, a small "double dip". But at some point, apple will move 10-15% up and then after that the wall street bulls will come back.

    and everyone will talk about the iTv and future content revenues, and what about the iphone 5s in June, does that mean october is the TV, and maybe a new iphone 6 still in october? when you hear this on tv, just hope you made your purchases 2 weeks prior.
    Dec 26, 2012. 03:18 PM | Likes Like |Link to Comment
  • Analyzing Ackman's Herbalife Pyramid Claim [View article]
    I am not dodging anything about HLF. I don't care if it is a Pyramid scheme or not, because I have zero interest (financial and products) with HLF.

    I care about multi-billion dollar hedge funds that are using market manipulation to profit with themselves or shadow funds or colleagues.

    i find it IMPOSSIBLE, that you are SA reader who casually stepped into this article on HLF and you formulate the opinions.

    I've read thousands of articles and thousands of comments on SA and you are the first person who is citing multiple case laws. You are clearly a lawyer and clearly had this research already completed before commenting on this post.

    You are trolling the internet right now to continue this negative publicity and to try to further Ackman's claims.

    This is the exact type of research that Ackman's super team for 1 year would have needed to argue their case.

    so I find it highly unlikely you didn't know about this massive short position before the public did. are you sure any family, friends of yours didn't have any nice december HLF puts?

    i don't know why you just don't stop posting. I am not a lawyer, but if I were you I would just stop before you dig yourself in a bigger whole.
    Dec 24, 2012. 10:34 PM | 4 Likes Like |Link to Comment
  • Analyzing Ackman's Herbalife Pyramid Claim [View article]
    doghouysereilly, you are a vulture dropping in with a new ID, arguing against HLF without merits. I have zero position in HLF, never bought anything from HLF.

    and actually, the only thing that makes me upset about this is actually's Ackman's motivations. so actually they are completely RELEVANT.

    I would prefer the SEC focuses their attention on who the put buyers and sellers were, and to whom Pershing's squares profits will go to on this deal. How is the fund funded? by whom? how much of the $2 billion dollar position is actually Ackman's own money? How much of that will he actually donate to charity?

    According to wikipedia Ackman has a net worth of $2 billion. So did he use entire personal net worth to take this short position?

    Oh wait? No? So he raised money with other people? So other people knew about this transaction buildup? And those other people didn't tell anyone?

    Are you one of those other people? If the SEC were to ask SA to trace your IP and find that you are colleague of Ackmans, and then do further research on you to find out that you had prior knowledge of this transaction before his presentation was done?

    If I were you, I would just stop posting on this article, you are creating a bigger legal risk for yourself when you get traced by the SEC.
    Dec 24, 2012. 09:58 PM | 4 Likes Like |Link to Comment
  • Analyzing Ackman's Herbalife Pyramid Claim [View article]
    Dear Mr. Ackman's lawyer from Pershing square, can you please either use a real identity so your true intentions are known or at least try to create legitimate SA account where you at least create some other post on other companies?

    Thank You,
    Dec 24, 2012. 09:30 PM | 2 Likes Like |Link to Comment
  • Nokia: After 144% Gain, Is It Time To Bail? [View article]
    Ashraf, can you please write negative news on apple so you can move that stock down too? I would like to continue to leg in at lower prices.

    thank you.
    Dec 24, 2012. 06:59 PM | Likes Like |Link to Comment
  • Year-Over-Year Apple Q1 Comparison: Projections, Estimates, And Actual Results [View article]
    hi XR trader, and readers

    before everyone goes wildly buying call options, I think it is important to consider other options strategies. Right now apple is trading at a fairly high implied volatility, which means apple options are expensive now.

    Currently trading at 39% IV. Post earnings you can expect IV to be in the 25% - 31% IV, which means you lose value on the call options simply because risk will decrease on the options.

    Also, feb expiration's you will fight time decay the whole way.

    so let's compare two trades. Spending about $2,500, do i buy calls or sell puts?

    Buy a 550 call and buy a 600 call.

    Max loss = total investment of = $2,590
    Implied volatility today = ~39 % combined

    Assuming the author is right on his article, and I think there is a great a possibility, as I am a bull myself you need to:

    Sell on Feb 9th (7 days) with apple at 615 because it lost some momentum and you are getting nervous and want to cash out. However, during this time period post earnings implied volatility fell to 29% b/c risk came out of apple after earnings.

    Assuming all these factors ->
    ~$5,850 would be your net sale on that day, more than 200% return in ~45 days. Not so bad

    The break even on this trade at expiration is 575.90.

    So what does a put spread look like, with the similar financial risk ($2,500).

    Buy a 520 put at -> $3,225
    create a $100 spread, so sell
    Sell a put 620 put at -> $10,570
    This creates a net credit of $7,345.

    Total maximum possible loss = 2,655

    So what happens on feb 9th? apple trading at 615, losing some momentum, you need to sell.

    Well implied volatility drops 10%, risk came out of apple post earnings, well this is actually A GREAT THING for you, because you have to buy back the 620 put and that buying will be cheaper now.

    with apple trading at 615, you will be able to close your put spread with a $6,200 profit.

    also, your break even on this trade is 546.55, much lower than the two calls. This will give you a lot of flexibility post earnings to decide what to do.

    But, wait a second, put spread caps your total maximum profit. where as calls have unlimited profit capability.

    Ok, so you are a dreamer, apple is trading at what on feb 16th? 650? 700? fine, you are stubborn bull, 750 is your best case scenario.

    what does this spread look like?

    Buy the 520 put -> $3,250
    Sell the 750 put -> $23,120 (umm ya)

    This is a net credit $19,895

    So your account only needs to cover a maximum possible total loss when working with credit spreads.

    But I just did an insane spread, so how much money do i need? well, actually the max loss only went up by about $600 to $3100.

    So if apple is trading at 750 at expiration you are basically looking at a 641% profit in 45 days.

    So this seems like free money, let me just pick a super high strike since my maximum loss doesn't even go up by that much. well it does slightly change your break even strike. and other factors like IV might start working against if you need to sell early and apple is not that high yet.

    the conclusion of this is that as an investor, trader, smart person, you need to do what market makers, wall street do. make options work in your favor. don't fight time decay, don't fight implied volatility, make them work for you.
    Dec 24, 2012. 04:14 PM | 6 Likes Like |Link to Comment
  • Excitement Over Corning's Earnings Beat Is Premature [View article]
    Enterprise value should be used be to compare the value of companies that may have very different capital cost structures. so actually, your point on radio shack is just perfect, because using that metric i can more easily compare the value of radio shack to a bank or to a industrial firm like corning.

    however, your entire paragraph on cash was a cash flow based analysis, so using LONG TERM LIABILITIES WAS WRONG. working capital would be a more appropriate measure.

    You also did not address the obvious of subtracting out a share repurchase program as a reduction in their future cash per share. the share repurchase program would be a completely neutral effect on the future cash per share.

    the bankruptcy thing - take some sarcasm on the poor cash flow analysis provided.

    in terms of "evidence" on price. i would agree with you that all suppliers of products come under pressures to reduce price and that clearly has happened to corning. but was one of the main factors driving this????? just the customers say i want lower prices or else? umm no. no sir. Read through q3 and q4 transcripts and Mr. flaws explains this very nicely. The panel makers were sitting on a glut of supply. Their supply chain allowed for 26 weeks of building TVs with inventoried glass without reordering glass. The panel makers reduced their inventory levels from 26 to 13 weeks in q3 and q4 last year and then I would imagine is further reducing to 8-12 weeks in q1 and q2 of this year. This SUPPLY driven problem is the main cause of the price pressure.

    So what happens when volume increases? volume increases to me sure sounds like demand. i learned once that demand could lead to higher prices.

    and then your counter argument also misses up all the points i bring up on gorilla glass. you make it sound like a zero growth, flat product. I however thing gorilla glass 2, is just at the beginning of an explosion. Corning will easily meet the 1 billion number on gorilla glass, which you make it sound as impossible.

    13% yoy growth in specialty driven "primarily by gorilla glass" i am assuming at least 20% growth on gorilla glass offsetting declines in the other areas. Last q1 gorilla glass was at 150$ million, so their gorilla glass for this quarter was probably at least $180 million.
    Apr 26, 2012. 11:21 AM | Likes Like |Link to Comment
  • Lessons Learned From My Attempt At Estimating Apple Earnings [View article]
    brad the analysis is very professional and is a well written article, time to get a photo to match it. im sure you love the beach and fishing and all.
    Apr 26, 2012. 10:51 AM | Likes Like |Link to Comment
  • Excitement Over Corning's Earnings Beat Is Premature [View article]
    Vince, I don't consider your cash analysis correct.

    you can not compare short term assets and swap them out with long-term liabilities. does not corning also have long-term assets, such investments, inventory, property, intangibles (patents).

    Corning has 6.8 billion in current assets, which is almost 4.50 a share.

    It has 1.7 billion in short-term liabilities. that is 5.1 billion in working capital, or 3.35 a share.

    then you subtract out their share repurchase program? are you exactly sure how many shares they will repurchase, because it sure looks like you reduce their cash, but then on the per share basis you don't consider all the outstanding shares they just retired, so why are we talking about a share repurchase program as reduction in their future cash per share? should be neutral effect.

    Your math brings them to 200$ million in short-term cash as if they are about to declare bankruptcy.

    finally, i think most investors see this display business supply chain reduction of 26 weeks to 13 weeks and price pressure as serious trough in a market cycle that will begin to correct upwards in q3 and q4, when people buy tv's for seasonality. don't other businesses have market cycle has troughs? airplanes, cranes, etc, when they hit bottom and start to rebound, the rebound is usually nice?

    You say all non-display segments grew only single digits on the yoy comparison. remember that q1 last year was a FANTASTIC quarter for corning, but your statement is not correct, as specialty segment still grew 13% yoy.

    specifically to gorilla glass -> i am guessing the growth was greater than 13%, but was offset by some weakness in other specialty areas. I agree it sucks they did not split it out this quarter.

    now here is the big thing on why i am a bull -> last year, they missed their their 1 billion gorilla target, because they were expecting much more volume to come on the TVs. TV = big, which = more glass.

    if you notice in their statement on gorilla glass, “Corning Gorilla Glass remains the cover glass of choice for most smartphones, tablet computers, and other consumer IT products,” Flaws remarked.

    they don't even say TVs anymore. Well you know what, that is going to change in Q3 and Q4 when their apple friends start shipping gorilla glass on those beautiful new BIG iPanels.

    oh ya, and apple will still be selling ipads. China and India hasn't gotten ipads yet.

    Oh and you know what else will need some touch glass (i.e. gorilla glass) in q3 and q4? all the new hybrid laptops / tablet computers that are now running the brand new windows 8 as an integrated PC OS with full touch. last i heard, windows 8 was going to be a game changer.
    Apr 25, 2012. 10:00 PM | 1 Like Like |Link to Comment
  • Why I Would Not Touch Apple Ahead Of Earnings [View article]
    ok, i agree that there is not rampant manipulation. generally i would say most hedge funds don't actually "conspire" with each other and then execute on the strategy.

    However, all of these funds, definitely have their own proprietary max loss calculators, and they all know the strike price to achieve maximum profitability for the number of outstanding shares owned, outstanding calls, and puts, and modelling how many shares they sell at what price.

    the argument is that it is very hard to be a lonely day trader because these last couple days on literally ZERO apple news, it is driven by institutional selling.
    Apr 16, 2012. 08:34 PM | 1 Like Like |Link to Comment
  • Why I Would Not Touch Apple Ahead Of Earnings [View article]
    lol @rocco - to say hedge funds who have significant positions in stocks, and also write large position of options calls and puts on these options - would not try to optimize their position (i.e. SELL STOCK or BUY STOCK) to maximize their profitability on options written is completely idiotic.

    Max pain indicator is not a magical predictor of a stock price, however, "real living and breathing experts" are not idiots. they will try to produce their best possible outcome.

    so you can dig your old articles up so I can read them and then you can let your readers perhaps take a look at a real study here:

    ok everybody, now take a second and pretend your a hedge fund expert.

    You have 50,000,000 shares of apple, apple is trading at $615, but you wrote 250,000 (25 million shares) covered calls when apple was trading at $550 @600 strike.

    Meanwhile, the expiration is right before earnings, and you are actually very bullish about movement after earnings (another blowout > 12.25$ ? )

    What are you going to do? Sit around and let 25,000,000 shares get called away the week before earnings reporting? NOOOOO you are a real life breathing expert.

    1. Your going to sell 10,000,000 shares,
    2. book your profits between 595 and 615.
    3. Then on Friday expiration you keep 25,000,000 not called away + 15,000,000 not sold = 40,000,000 shares
    4. Monday? sit tight? NO. you are going to buy back at least 5,000,000 of your shares sold, and then before earnings, when implied volatility is at a peak (this is when sellers make the most money writing options), you are going to use 20,000,000 of your 45,000,000 shares and write some more calls and puts.

    people this why writing calls and puts is given the nickname "market maker".

    so hence my my guarantee - apple will close between 550 and 590 by friday, and be up at least 2% on next monday morning.

    but you keep calling me a Cat rocco.
    Apr 16, 2012. 08:07 PM | Likes Like |Link to Comment
  • Why I Would Not Touch Apple Ahead Of Earnings [View article]
    Peopleeeee - apple is selling off for 1 reason. large institutional investors (HEDGE FUNDS) are moving the stock price closer to the strike peg.

    Don't know what a strike peg is? Optionistics has a pretty good tool they call Max Pain

    "The Strike Pegger, which computes Max Pain ©, displays the strike price where the writers of calls and puts incur the minimum liability for satisfying their obligations to put and call buyers."

    So basically the "market makers" the people who sell all the calls and sell all the puts, will experience the least net pain if apple is trading at 560 on Friday expiration.

    So if you are a hedge fund and you have a couple million shares of apple, and couple hundred thousand option contracts, they do the math. Give the stock some downward moment, take earnings on their stock gains, and simultaneously reduce their option losses.

    This is about as close I come to a guarantee. Apple will stabilize between 555 and 590 between now and Friday close. Monday morning next week, up at least 2.5%.
    Apr 16, 2012. 07:24 PM | Likes Like |Link to Comment
  • Apple's Valuation Is Good, But Are The Assumptions Correct? [View article]
    uggh, everything was fine and I was glad to see a contrarian view on apple, but then i saw you were long HPQ. it just undid your nice article.
    Apr 12, 2012. 11:09 AM | 4 Likes Like |Link to Comment
  • 5 Ways To Play Google Earnings [View article]
    im still looking at selling a reverse condor tomorrow.
    Apr 11, 2012. 04:09 PM | Likes Like |Link to Comment
  • 10 Ways HP Is Better And Different When It Comes To Cloud Computing [View article]
    Dana - sounds like you are a lifer HP fan so this news may be hard for you to accept.

    I work as an independent consultant and frequently see many companies offloading IT hardware and service support to the "cloud".

    While HP has good service for uptime / servers & performance, their actual support service to solve production tickets is at the bottom of my own personal list.

    Basically HP subcontracts most of this work to usually the lowest indian provider. These people may be technically qualified, but they are clueless on the business process of actually solving problems.

    Meanwhile, IBM and accenture,for their cloud services use much more of an employment model, while still leveraging lower cost offshore resources, these resources are employees and processes they invested in. Their cloud IT service support is hands down far ahead of HP.
    Apr 10, 2012. 11:39 AM | 4 Likes Like |Link to Comment