Apple can back their shareholders off the ledge, but will they?

“Simple question to the Apple (AAPL) bulls whose answer has enormous implications: when do you plan to sell?” Ashraf Eassa writes for Seeking Alpha. “I don’t know about you, but when I buy a stock, I typically have a ‘target price’ in mind at which I would decide to either sell calls or outright sell the stock. Why is this? There’s nothing more irritating than seeing a major unrealized profit evaporate into thin air… well, except a giant unrealized loss! In this article, I implore investors in Apple – even at these levels – to answer the simple question: at what level would you sell?”

“How much upside do you see versus downside? Clearly, $705 was a top that was rejected pretty violently, and even the $600’s couldn’t hold for that long. What do you think it will take for the broader market sentiment to all-of-a-sudden shift in order to bring the price per share up?” Eassa writes. “The ‘saving grace’ here is the cash. While many factor it into their valuations as Apple looks even cheaper from an EV/EBITDA standpoint, I believe that Apple can truly ‘save’ its shareholders by getting super aggressive with its buyback. Enough of this $10B authorized nonsense – Apple, you have $137B on your books collecting a mere 2% or so!”

Eassa writes, “If Apple were to engage in an aggressive buyback, it could help shareholders in more ways than juicing up the EPS line (although this really would help). See, when a company buys back stock, it does so on the open market. Now, you’ve got these hedge funds that are maybe playing with a $1B AUM… or if you’re David Einhorn, $5B. But Apple has $137B. That means it could literally go and buy back 34% of its shares at the most recent closing price! So, what’s stopping Apple from hiring, say, UBS and telling them to switch on the buyback program whenever the stock chart starts to get bearish? Not only would this help to get the traders pushing this stock in the right direction for shareholders, but it would also have the added effect of juicing EPS.”

Read more in the full article here.

18 Comments

  1. “I implore investors in Apple – even at these levels – to answer the simple question: at what level would you sell?”

    You implore??! Who the hell are you sigmond?

    Idiot, just because your dd standards think in a dosposable fashion doesn’t mean anyone else as you take your stupid MO into consideration. Apple investors invest with conviction, many years of conviction that comes from being cherised users.

      1. I’m hoping that they shouldn’t be able to play musical chairs forever, but then again the way money is moved around so well in the stock market, who can really say. I wouldn’t think it’s possible to keep pumping up companies that only make relatively small profits by merely inflating their P/Es. However, my take on what the stock market actually represents may be entirely wrong. Day trading and hedge fund cash movement doesn’t seem like a good thing to keep a stable market, but I guess that the easiest way to make quick money. I’d always thought it was a place to make relatively long-term investments in solid companies, but now it really seems more like a casino and betting on long-shots.

  2. Time to shake off the volatility players. Apple shouldn’t blink. They push to get a reaction. As long as Apple is solid, it should behave solid and not let anything budge it. Giving in only encourages more volatility.

    1. Agreed. Or at least agreed that that is what they should do.
      Apple makes amazing products. The cash hoard is a product of that. They should keep making amazing products and not get distracted by the money games.
      Let the share holders jump off that ledge. Most of them were just here for a quick buck anyway. And the investors that really invested in the group of people called Apple, will be in it for the long haul anyway.

  3. i agree, the stockprice can be managed as any other asset of a company. sj’s doctrine of not caring about the stockprice (“manage the top line, and the bottom line will follow”) was probably right back in the days when apple was the underdog. nowadays, as one of the biggest companies on this planet, this isn’t an option anymore. a collapse like we have seen in the last 6 months not only hurts the stockholders (a lot of them work at apple and are probably affected by seeing a lot of their wealth vanish into thin air) it tarnishes the perception of the company and thus future prospects. heck, it even hurts sales when people think that apple is in trouble. it doesn’t matter that they aren’t. tim cook has to wrap his head around the idea that he also has to manage the memes that are floating around in the media and the blogosphere (i.e. controlling the message) and the stockprice is one big part of it.

  4. I believe the only thing Apple shareholders can hope for now is increased dividends. I don’t see any appreciable upward movement in Apple’s share price coming any time soon. I feel Apple shareholders will be pretty much hung out to dry if they’re merely hoping for Apple to go up in share price.

  5. Apple is great because Apple does “think different” and does things the Apple way.

    There is now a storm of criticism for Apple to “do what everyone else does”. That would be the death of Apple.

    I am an investor, not a trader. I bought my Apple investment and plan on leaving it for my daughter, with the firm belief that over time, as long as Apple keeps “being Apple”, Apple will continue its unconventional, but successful ways.

  6. What a passive investment strategy: Buy now and set sell target well in advance of any changes in the entire investment spectrum. I hope this guy really has a more active strategy where he keeps looking at buying opportunities elsewhere and sells one stock to fund positions in another company when his analysis of the prospect for increases in the newer positions exceeds his analysis of the prospect for increases in his established positions.

  7. Ha, I love apple stock as a long-term investment because it’s so risky. It peaks it dives, it spins out of control and soars to heights never seen before.

    Why would a shareholder want to go back onto the ledge. When will I sell my shares, no one’s business but my own.

  8. Keep your AAPL. On my AmeriTrade, of the major 7 AAPL advisors, 4 say neutral or hold, and 3 say buy. I bought my first shares at $18…. Wish I still had them, but they did earn me a down payment on a pretty decent car. My paltry little 17 shares were bought at $325 a couple of years ago. Even at today’s stock price, it’s still a great investment. If you look at Apple’s stock price growth from mid 2009-through early 2012,
    The stock price now isn’t much below where it is if you linear regression it (leaving out the haywire growth in 2012). Think long term.

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