“Here’s a fuller idea of Legg Mason manager Bill Miller’s view on Apple (AAPL) — the one that ever so briefly got traders buying the stock again this morning,” Brendan Conway reports for Barron’s. “This is from an excerpt of a forthcoming interview with Consuelo Mack WealthTrack that airs Friday evening at 7:30 p.m. on public television.”
Apple is the Dr. Jekyll and Mr. Hyde of the stock market. It’s the Dr. Jekyll in the sense that they are one of the greatest product innovators creating products that people love and a brand that people love, and they’re Mr. Hyde in their completely idiotic and dysfunctional capital allocation which is the worst probably in the history of corporate America among good companies. So they have $135 billion of cash… Tim Cook said when they had $90 billion of cash, he said it was way too much. They had not possible reason to use it, announced a modest dividend and a modest share buyback that would not even draw down the cash at all, not one dollar. A year later, 135 billion of cash… I think Apple at $450 a share has huge optionality. It’s nine and a half times earnings. It’s going to grow probably 15 or 16 percent this year consensus, 12 to 14 next. Coke grows six to eight percent and trades at 17 times earnings, so if Apple had a capital allocation like IBM or like McDonald’s… McDonald’s pays out 100 percent of free cash flow to shareholders and trades at 15, 16 times. Apple would be up 50 percent on just sensible capital allocation. — Legg Mason manager Bill Miller
Read more and/or watch the video in the full article here.
MacDailyNews Take: Obviously, as they’re not stupid, Apple has some master plan for all of that cash. Whether it be buying up content creators who refuse to play ball, snapping up Microsoft and putting them out of their wretched misery, building flying cars and developing iTransporters, buying Lithuania, or whatever… eventually we’ll find out what Steve told Tim to save up that mountain of cash for.
[Thanks to MacDailyNews Readers “David E.” and “Michael H.” for the heads up.]