Apple’s stock swoon blamed on AAPL margin requirement increase

“As I write this, Apple (AAPL) is taking a straight down 4% beating in the market,” Paulo Santos writes for Seeking Alpha. “This has come out of the blue and is rather rare for Apple when there are no news and the market itself was rather stable.”

“At this point, the most plausible explanation is not very reassuring. It seems that COR Clearing is increasing Apple’s margin requirements to 60% from 30% due to excessive concentration,” Santos writes. “This is supposedly leading to mechanical selling to re-establish maintenance margins of leveraged traders.”

Santos writes, “Over the short term and until excessive speculation is wrung out of Apple, the stock is likely to remain pressured. This latest move to increase margin requirements should already take care of most leveraged speculation, while the call option speculation has ceased a while ago as well, so the process is well advanced now. Once this temporary excessive-sentiment related phenomenon is over, Apple will be able to go back to reflecting its own fundamental prospects, namely those affecting the iPhone 5 and the iPad.”

Read more in the full article here.

Over at Baron’s, Tiernan Ray reports, “There was also a brief item from the staff at StreetInsider this morning stating that some clearing firms are raising margin requirements for clients that trade in Apple, without citing sources. CNBC appears to be making the margin requirement argument as well.”

“Laurence Balter, principal with Oracle Investment Research, who this morning raised his rating on Apple to Strong Buy, tells me in a brief email communication that, indeed, he believes the swoon this morning is a consequence of greater margin requirements by some firms as a consequence of the rogue trader at Rochdale Securities back in October,” Ray reports.

Read more in the full article here.

Related articles:
Former Rochdale Securities trader arrested in fraud scheme involving Apple stock – December 4, 2012
Apple’s stock has the flu; FBI probing rogue trader at Rochdale Securities – November 6, 2012
Rochdale said to seek capital lifeline after AAPL trading error – November 2, 2012

19 Comments

  1. Or the sell off is the idiots that only trade based on the charts. It looks like yesterday the SMA 50 and 200 crossed. Scary event! Just the charts not the facts!

    Clueless idiots.

  2. Sheer manipulation of Apple stock. No other reason for it. There should be a government investigation on this kind of illegal activity. No other stocks in NASDAQ is treated like this. Apple and Tim Cook should have there lawyers look into this themselves. There is definitely some kind of funny business going on. Apple should be at over $800 a share with the kind of business its doing, but no instead it keeps floundering at $500 because of illegal activities and STUPID, IDIOTIC speculation and nonsense.

    1. The only problem with what you’re saying is that Tim Cook couldn’t care less about Apple shareholders. Why should he? He’s making plenty of money as CEO. Apple’s making plenty of revenue and profits and growing cash internally. The hedge funds and institutions are making money because they’re the ones moving the stock around.

      Only the small Apple shareholder is getting screwed and they hardly count for anything. So don’t expect Tim Cook or Apple management to coming running to save you. Apple doesn’t even need small, private investors anymore. You would be best served by taking your money out of Apple and putting into a stock that will offer you decent returns without all the volitility and headaches that Apple brings. Jeff Bezos is doing a far better job of protecting Amazon shareholders than Tim Cook is at protecting Apple shareholders. Tim Cook’s job isn’t in jeopardy, so honestly, why should he or the rest of Apple’s executive management care.

      Sure, common sense tells you Apple should be going up based on “solid fundamentals”, but as you can see, the stock market doesn’t quite work that way. Companies can lose money and their share prices will rise as with Amazon’s case. Apple’s P/E is falling even faster than it was last year. Don’t expect a blowout quarter to increase Apple’s share price, either. The stock market has become a casino run by the Mob, so don’t expect honest returns. Apple is no better a stock than say Netflix or Priceline because fundamentals no longer matter. Illegal activity is probably welcomed because it sends the money to those who are in control of the market. I don’t think it’s good for the economic state of America, but I guess that really doesn’t matter anymore.

      I’m a diehard Apple user and long-term Apple shareholder. I bought most of my shares back in 2004 and I’m still holding and well ahead in gains. I’m also retired. However, I see the way things are going for recent Apple shareholders and it doesn’t look good at all, especially over the last few months. Almost eight months have gone by and Apple shares are worse than flat-lined despite really decent earnings over a couple of quarters. It’s a crooked market and Apple is being targeted to come up short. Need I say more.

      1. Dude….the #1 responsibility of a CEO at a public company is to his shareholders. Plus Tim is a shareholder as well, and a large one at that. The amount of money he makes in stock dwarfs what he is paid in cash. Trust me his #1 responsibility and incentive is the stock price. So yes he cares about shareholders/stock price.

        Agree with everything else you say about something stinks about the manipulation of AAPL stock. Its an insiders game and always has been.

  3. I really wonder why amazon with its stellar P/E ratio of nearly 3,400 (!) is still going up. Apple is perhaps the most manipulated stock of Nasdaq and long as it pays out for some big boys, that won’t ever change.

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