“Last Tuesday, the day before Apple released its holiday quarter earnings and two days before the company lost $60 billion in market value, Goldman Sachs sold $30 million worth of so-called structured bonds tied to the performance of Apple’s stock, SEC filings show,” Philip Elmer-DeWitt reports for Fortune.
“At the time of the sale, Bill Shope, Goldman’s Apple equities specialist, was predicting that the company’s shares would climb to $760 within 12 months,” P.E.D. reports.The day after the earnings report, he lowered his Apple price target to $600. The bonds Goldman sold, a complicated form of bank debt, convert to Apple stock if the company’s shares fall below a pre-set strike price.”
P.E.D. reports, “This would not be the first time Goldman Sachs made money betting against its clients.”
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Kevin Dugan reports for Bloomberg News, “The notes are Goldman Sachs’s largest offering tied to the company since Feb. 24, according to data compiled by Bloomberg. Structured notes, which are bank debt packaged with derivatives, allow individual investors to take bets on everything from the price of gold to movements in stock volatility. Tiffany Galvin, a spokeswoman for Goldman Sachs, declined to comment on the offering.”
“Last year, investors bought $1.75 billion of structured notes tied to Apple, making it the second-most popular reference measure after the Standard & Poor’s 500 Index, Bloomberg data show,” Dugan reports. “Notes linked to Apple surpassed those tied to the London interbank offered rate for the first time since at least 2010, when Bloomberg began collecting comprehensive data on the securities.”
Dugan reports, “Investors have bought $65.6 million of Apple-linked notes in January. On the day before the earnings report, HSBC Holdings Plc’s U.S. banking unit also sold $710,000 of notes tied to the company, and UBS AG issued $120,000 of securities.”
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[Thanks to MacDailyNews Readers “Fred Mertz” and “Judge Bork” for the heads up.]