“Short-term market participants have been using [Apple Inc.] shares in what are known as pair trades – betting that one stock will go higher while hedging that bet by short-selling a stock expected to go lower,” Jeff Cox reports for CNBC.
“It’s a strategy that has worked particularly well over the past five months as Apple (AAPL)’s stock has crumbled while the rest of the market has surged higher. Anecdotal evidence from traders indicates that it’s essentially an unraveling of the opposite trade that had been taking place prior to Apple’s fall,” Cox reports. “The pair trade also helps explain why Apple’s fall from grace was so rapid and aggressive.”
Cox reports, “The stock is heavily owned by mutual fund managers, with more than 1,000 having it as a top-10 component. Two-thirds of its shares are held by institutions. So the drop from the September high could be at least in part due to simple portfolio rebalancing in which the stock more than tripled in value over a two-and-a-half year period.”
Full article here.
Gawd, there are a lot of articles about Apple’s share price, aren’t there?. But one thing I don’t get is: how does it affect what Apple does?
When the share price is low Apple invent and make great products and sell gazillions of them.
When the share price is high Apple invent and make great products and sell gazillions of them.
When the share price is moving up Apple invent and make great products and sell gazillions of them.
When the share price is moving down Apple make great products and sell gazillions of them.
And if they need to buy anything that’s required in order to keep inventing and making great products they’ve got plenty of cash.
So does their share price affect anything that affects us Apple users? Does Jony become less creative when the share price is low? Does Apple become more innovative when the share price is high? Do the employees make more mistakes when the share price is low? Do Apple stores sell more stuff when the share price is high? Do the factories in China stop making Apple stuff when the share price is low?
I don’t get why Apple can’t just ignore all this share price garbage and keep inventing and making great stuff. Does anyone know?
Who ignores their share price more than Apple?
I s’pose you’re right. So there’s the answer.
Very astute observations. The only thing that share price might affect other than shareholders is how Tim Cook might make some decisions about release dates and feature sets in products to be released so as to give confidence to shareholders and keep the stock price up.
“Very astute observations.”
Not really. It seems pretty obvious.
As long as they keep making great stuff and don’t go broke it doesn’t matter to the users. Making money on the share market is a completely different subject.
There are tangible impacts upon Apple as the share price rises: More mid-level employees have enough money to leave and do other things, the impact of their leaving is hard to predict though, as some were Peter-Principle candidates and thus free up those below by their departure; others were solid contributors and managers and are missed throughout the transition to their replacement.
There are tangible impacts upon the day-to-day operations as the stock price drops, too: First, at the CEO offices there are many more calls from investment institutions seeking comment. Also, employees who had been laying plans based upon the stock remaining high at their next vesting date suffer some loss of productivity as they wrestle with the new realities.
For Apple the effects of declining share price haven’t been felt for many years so I hope current management can recognize the impact and move forward gracefully.
My prediction is that overall it draws out the timeline of innovation/creation. Since Apple has traditionally used launch windows, significant delays can happen when appropriate launch windows are missed and introductions need to skip out to later windows.
Or, could it be that Apple has seen its best days and they’re smart to dump it while it’s still relatively valuable? Reports are saying that this current quarter will be Apple’s first quarter they make less profit that the previous year! We’ll just have to wait and see.
BTW, writing this from my Lumia 920 WP8. 😆
What’s a Lumia 920 WP8 … catchy name ….
Nokia Lumia 920 WP8 (Windows Phone 8)
Apple iPhone 5 iOS (i Operating System)
Hope that illumianates that for ya.
And the Lumia is a beautiful phone.
Nicely put. It is.
Wait . . . Nokia is still in business? REALLY? Whoa . . . and Windows Phone 8 is actually on one of their devices? Man, who knew?
Yeah it’s true I googled it. They (allegedly) have even sold a few hundred of them;-)
The (broad) consensus seems to be however (other than with paid MS shills) that overall it isn’t a very good device. I guess that is payback for all the apple haters, ether take a second rate winmo phone (and additionally endure total app-lack) or deal with malware and security issues of ‘roid because you have denied yourself the real deal.
Let the hate go boys, you are only limiting yourself.
-So often times it happens that we live our lives in chains
And we never even know we have the key
Those Lumia sales numbers are off the charts. They are really putting a hurting on Apple.
Soon though, they may start appearing on the charts however.
Jeez smacsteve! Now you got em all pissed off!
Definitely need to rebalance those portfolios with lesser performing stocks and bonds that yield less than 2%. Leadership at its best.
Yes, the insanity of fund rules is amazing. Apple grows 30% a year, so keep selling it and other winners in order to buy more losers and keep the proper investment proportions, because, after all, that’s all that matters.
Sadly Apple have now lowered itself to spec bumping to goose quarterly sales. They wouldn’t have to do this if they were innovating more.
Think Retina iMacs and an Apple TV.
What Apple TV? Oh, you mean the popular little black box…
Never buy too low or sell too high… it’s time versus money and today is a good in point up to 500
What a complete crock, as one should fully expect from cnbc. “No manipulation. Nothing to see here. These aren’t the droids you’re looking for. Nothing but pair trades.”
Right, the SEC is on it I’m sure. These “analysts” are cousins to the smart lads who led us to the subprime mess by assuming that people who couldn’t pay back loans were still acceptable for loans, thus creating a mess that the rest of us have to live with.
If they can’t afford a loan how can they afford rent?
Or do you mean they should’ve bought a cheaper house?
The simple reason why nobody should buy Apple stock is the CEO’s comments to staff, reported here and elsewhere, basically that he doesn’t give a shit about the share price ! Which is all well and good for him and the other directors, who, like Al Gore, get options at criminally low prices, so have no incentive to care about the share price. Share options should always be set ahead of the market price, 2 weeks AFTER the release of annual accounts to create the incentive to add value for the shareholders, who, Mister Cook, are the fucking owners of the company ! Get out of your ivory tower. A simple, one off special dividend, declared a month prior to annual accounts being declared, would have burnt anyone manipulating the stock and thought them that Apple are unpredictable, therefore not a stock to gamble on ! It’s not rocket science. On fundamentals, it’s a buy, buy on managements commitment to adding value for shareholders, forget it. This is particularly irresponsible in light of the cash horde that they just keep adding to ! This is the shareholders money !
Wow, with respect, your argument is nonsense.
The proper mission of Apple’s management is to produce great products that people will purchase, at a good profit to the company. That’s also the best long term interest of shareholders. I’ve seen all too many companies attempt to manipulate their share price, often by sleazy tricks that didn’t work anyway.
Third party manipulation of AAPL is an old and oft-told story. I sold last year because I thought the stock was being pushed up too fast, and took a very good profit. I bought back again last week, because I thought AAPL was a very good buy.
As an investor, it’s my responsibility to watch out for my own interests. I’ll continue to be satisfied with Apple management if they meet their mission noted above, and will continue to buy their products. I’m not a day trader. I buy equities intending to hold them for at least a year. Over the years AAPL has done very well for me, and I enjoy their products, as well.
So what your dying is, Apple should exist to please shareholders? May that say never come! This was a gret cleaning of the scum of investors who think sticks exist o reward their incredibly great minds for buying and selling to make huge profits. That’s fine. But let’s stop pretending this stupid 80’s mantra of a company is there to make money for the shareholders. Companies that pay more attention to the stock price than they do to innovation eventually lose customers. Customers are the reason Apple exists. Cook isn’t arrogant at all, he’s right. Which is why his company can beat all records in mankind’s history by selling $54,5 billion and have a profit of $13 billion while Amazon has yet to make $6 billion in its entire existence. Amazon up 9% after disappointing to Aaple’s drop of 25% after delivering record numbers shows that the stock market is just a psych-casino. AAPL will hit $1000 per share by end of 2015.
The arrogance of Tim Cooke, Apples CEO, telling staff at a backslapping meeting after their recent accounts were delivered, after which the share price plummeted 12%, making it minus 37% since last year, under his “leadership”, but the arrogance of him saying that he didn’t care about the share price ! This is from the CEO of the biggest company in the World ! The man might be good at making stuff, but he ain’t no CEO. What about the pension funds, the little old ladies etc? Just because he got handed a couple of hundred million $ worth of shares for next to nothing, so we know he won’t miss 20 million $ here or there, what world or ivory tower does this idiot live in ? His job, is to make money for the owners, the shareholders, not just him and the boys, getting stock options at criminally low prices !
So Mr. Wow, you’ve completely shown your hand with your comments. Apparently you’re not a long time Apple user, or if you are you’ve lost touch with e child like wonder the Mac faithful remembers, expects, and longs for, for many years to come.
The “think different” philosophy of Apple applies to their ethos and philosoohy as much as their products. Apple has never cared about what the stockholders think & they damn sure don’t view the shareholders as the owners – at least not in any sense that shareholders give voice to the direction of the company. Hell, many of the faithful almost led a revolt when Mr. Cook “gave in” to the shareholders whining for dividends – seeing it as a sure sign that Cook was departing from the “true” apple ways of Steve.
It wasn’t cow-towing to shareholders that made Apple the greatest and most valuable company in the world!
Doh! While I’m pretty sure there was no bovine delivery going on in Cupertino either, I meant Kowtowing – not Cow-towing. That’s a pretty funny autocorrect.
I hope the SEC and FBI lock up those hedge fund criminals.
Play with fire you’re gonna get burned
Re: WOW,
You aren’t a long-time Apple user, because if you were you would know it was Steve Jobs who once said he doesn’t worry about share price, he is concerned with creating great products.
In fact, if you look back to the mid-2000, Steve didn’t concern himself with share price, in fact he would give low estimates and the stock would tank, analyst would complain and he would ignore them.
This could be why the analysts aren’t Apple friendly. IMHO
“Simple” does not equal anal-yst…