AAPL is Overpriced!

Quote from bwolinsky:

Buy backs do impact balance sheets and reducing float with what's likely even higher profits increases eps. It's not the same as a split.
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It's worse (than a split) when the shares drop. It's a trade, period. You're implying it's an arbitrage. They should've done share offerings at 695 and then a buyback at 375. So what?

Einhorn's 4% perpetual is a smart idea as their net will always be a multiple of financing, and therefore the dilution is an arb. They need to leverage, not de-leverage. If not, then they're failing and it's moot.
 
Quote from drownpruf:

It's worse (than a split) when the shares drop. It's a trade, period. You're implying it's an arbitrage. They should've done share offerings at 695 and then a buyback at 375. So what?

Einhorn's 4% perpetual is a smart idea as their net will always be a multiple of financing, and therefore the dilution is an arb. They need to leverage, not de-leverage. If not, then they're failing and it's moot.
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This is a leveraging mechanism? How is it dilution?

If capex is increased borrowing increases, eps accrual goes more to the company, and the multiple will rise since earnings are increasing. The arb is at that 20 multiple.
 
Quote from bwolinsky:

This is a leveraging mechanism? How is it dilution?

If capex is increased borrowing increases, eps accrual goes more to the company, and the multiple will rise since earnings are increasing. The arb is at that 20 multiple.
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Dumb assumptions. The multiple may be 20x with the stock at 300 when demand goes to shit, and they will be DESPERATE to issue.

Debt is leverage. Nobody acting in their self-interest would pay 4% if earning 2%, unless you're a delusional American consumer. Obviously the arb is operational in the case of AAPL.

I am not going to get into the mindless capex and multiple expansion assumptions you're making other than to say that AAPL has no appreciable debt (14x ratio). They could fund their capex with cash for 20Y.

The EPS accrual argument is a bet on the share-price. Those deals are generally stupid; i.e., it's done nothing for IBM. Issuing stock is the arb.

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There will always be investments with a better ROI outside your core, and without leveraging on operations. You don't add risk beyond the operational risk you take as a public company. The answer IS NOT to discretely become a private co. How would it have looked if done at 600-700 on the share price? It's adding gas to a fire.

GOOG didn't do buybacks; they invested outside their core (Youtube, etc) and that was a massive add to their multiple.

The convexity of earnings // dilution > 0
 
Quote from bwolinsky:

I would look at selling AAPL above a 20+ PE.



Look, Apples a $500 billion stock with a $150 billion buyback and profits won't ever fall, so the reduced float count will drive earnings at least 30% without Apple having to ever acquire any more customers.

It's simple math. It all adds up to billions and how many billions I'll take my chances waiting on the PE to tell me. Until then, this stock's sitting watching these buybacks spruce up the stock price, reducing outstanding share count, and all around still paying a yield that's more than gravy for most bonds. It's a win win all around and I won't ever lose on it.
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Is buyback real or just talk? Over what time period? Time is important for calculation. Your 30% should be 42%.

I like what you write. Continue writing. Do not pay attention to the drivel of some.
 
Quote from Humpy:

Q. If a person with the top qualities such as Steve Jobs were to apply for a top post in Apple would he/she get accepted ?

A. Probably not, as people only rarely employ other people who are better than themselves. Well would you ?

So the Microsofts etc. can only expect worse CEOs not better. That is why the shareholders should do the picking not a small committee of non exec directors who are open to bribery etc.
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+1.
 
At a PE of 13 and the current low rates, a company CEO would be stupid not to buy back stock, particularly if he knows his earnings would rise or stay the same. If he does not buy back it would mean he knows that his earnings would be lower, and that the actual PE is maybe say 70. In such case it would make sense to not buy back. The CEO knows the truth.
 
Quote from tradingjournals:

At a PE of 13 and the current low rates, a company CEO would be stupid not to buy back stock, particularly if he knows his earnings would rise or stay the same. If he does not buy back it would mean he knows that his earnings would be lower, and that the actual PE is maybe say 70. In such case it would make sense to not buy back. The CEO knows the truth.
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Don't forget indices are vastly overbought, if I was in charge of buybacks I would want to do it during an overall bear market not at all time highs in dow and sp500.

If a correction does occur or even a bear market, no one comes out alive, no even the most solid of companies.

I would do the buyback low, not high.
 
The crowd may think it is smart to own every low PE stock. If the stock does not pay dividend or does no buyback, or anything similar to payback the stock owner, I believe owning a low PE stock may not be smart, as it might be viewed as similar to borrowing at high interest rates. From the perspective of the short seller, he should pay the yield but if there is no dividend or equivalent, the short seller is getting a "free carry ride" of say 7% for PE ~ 13.
 
I don't know, the news off Digi and other suppliers pushed her from $520 to $558 this past week. Is Apple still expensive, the weekly options made some people millionaires this week. Who is behind this massive squeeze or is this a change in the view of Apple's long-term viability without Steve Jobs finally setting in?


We might just hit $600 like Wall Street analysts are claiming. I have access to Tier 1 research, they are upping the next Qs EPs, what say you?


Carl Ichan is losing his mo-mo ability to drive stocks up, look at everyone who bought NUAN thinking he is a trading god. Ichan is a killer investor, he is a mini-god but I think his effect is about to end like all other "talking heads" who pushed stocks up big time. HLF is stuck, NFLX, he pumped that stock before Earnings and dumps after claiming it was the next "Big Thing", I don't trust Ichan and I wonder if he was selling in to this fury with those giant VWAPs each day. His cost is low, he bought in the $390s and $450 range?
 
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