Use Apple’s cash to your advantage

“In recent years, it has been challenging to figure out how to get any type of return on your cash. Checking accounts, savings accounts, and money market mutual funds are paying next to nothing. Short-term certificates of deposit (CDs) likewise have yields that leave much to be desired,” The Financial Lexicon writes via Seeking Alpha. “I would like to present one possibility for putting to work any excess cash you may have built up that you don’t want sitting around earning just a few basis points but also don’t want to invest at today’s prices.”

“Even if you don’t believe that ‘cash is king,’ it is hard to deny that among corporations, Apple (AAPL) is the ‘king of cash.’ According to its 10-K filed October 31, 2012, Apple had $121.251 billion of ‘cash, cash equivalents and marketable securities’ at the end of fiscal year 2012, up from $81.570 billion one year prior and $51.011 billion at the end of fiscal year 2010. Companies in the technology sector are generally known for having lots of ‘cash,’ but Apple takes it to a whole new level,” The Financial Lexicon writes. “Regarding the huge sums of cash in the technology sector, the challenge these companies have returning that cash to shareholders due to large portions of it being held overseas has widely been discussed. Apple, for example, has $82.6 billion of its $121.251 billion held by foreign subsidiaries. Not surprisingly, its recent 10-K states, “The Company anticipates the cash used for future dividends and the repurchase program will come primarily from current domestic cash and from on-going U.S. operating activities and the cash generated from such activities” [emphasis added]. But just because cash is held overseas and not returned to shareholders in the form of dividends or buybacks does not mean that shareholders won’t benefit from it in the form of its supporting the stock price.”

The Financial Lexicon writes, “Apple may not be using its $82.6 billion held overseas to pay dividends and repurchase stock, but the company is given credit for that money when it comes to discussing cash per share. According to, Apple currently has 940.692 million shares outstanding. Its cash, cash equivalents and marketable securities therefore equal $128.90 per share. Using put options, investors can take advantage of Apple’s cash per share to create cash-like positions and dramatically increase the returns on their extra funds sitting idle in money markets and bank accounts.”

Read more in the full article here.

[Thanks to MacDailyNews Reader “Carl H.” for the heads up.]


  1. I’m sure I’d heard that Apple’s $120 billion cash reserve isn’t worth anything to Apple shareholders. Amazon has about $5 billion in cash and that paltry amount provides better share price support than Apple’s amount does. That huge cash reserve doesn’t seem to help the perception of Apple’s growth potential either. One would think that when a company has that much cash, just one large strategic acquisition could change growth potential overnight. The way I see it is that a company constantly spending money on acquisitions is far more important to Wall Street than a company continually sitting on idle cash. Apple should have already spent some of their cash reserve on acquiring a search engine by now.

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