Jeffrey Gundlach: At this price, Apple looks reasonable, but it’s not going to $1,000

“At first glance, Robert Shiller and Jeffrey Gundlach make an odd pair. Shiller, recently awarded the Nobel Prize in economics for his “empirical analysis of asset prices,” is soft-spoken and has the professorial demeanor befitting a Yale academic. Indexes bearing his name for stock valuations and home prices have become part of the nation’s financial lexicon,” Lawrence C. Strauss reports for Barron’s. “Gundlach is a brash, sometimes bombastic bond titan. He is CEO of DoubleLine Capital, a Los Angeles asset manager with $53 billion in assets, mostly in fixed income.”

“But the two have plenty in common. Gundlach, for instance, did doctoral work in mathematics at Yale and, like Shiller, has a good eye for bubbles; he spotted trouble in the housing market before it collapsed in 2008. Now, Gundlach and Shiller have launched the DoubleLine Shiller Enhanced CAPE fund (ticker: DSEEX), which Gundlach will manage,” Strauss reports. “The fund is tied to a Shiller innovation — the CAPE, or cyclically adjusted price-earnings ratio. That’s stock prices divided by their average earnings over the past 10 years, adjusted for inflation; the fund gravitates to low-CAPE sectors. We recently sat down with the pair to discuss stocks, bonds, and a monstrous housing bubble — this time in Norway.”

A snippet:

Gundlach: We sold Apple, and then it dropped a lot, and then we thought it would drop to $425, but it actually went below $400 last spring and summer. We bought it at $405, and we still hold it. I like Apple because it seems to be almost an asset class. It doesn’t seem to trade like the stock market. Apple seems to be very noncorrelated to the S&P 500, and it is cheap. It generates a lot of cash. The growth prospects were grossly overestimated a year ago. But it’s still a very, very large cash-flowing company. So at about $525, where it traded recently, Apple looks reasonable. I don’t think the stock is going to make a lot of money—it’s not going to $1,000—but it can grind its way higher.

Read more in the full interview here.


  1. It’s that “Goose that laid the Golden Egg” mentality. Apple has had a string of hits and therefore it cannot have any more. All of the analysts have the same case of presbyopia.

    1. Do you honestly think the Mac Pro is going to be some revenue driver for Apple? Everyone says it has the wrong shape and it’s too expensive. As much as I like it, I don’t see it adding much to Apple’s bottom line. How many of those things does Apple sell a year, anyway? 500,000? Apple doesn’t break out those Mac Pro numbers but I’m willing to bet it’s not a lot.

  2. Will Apple be ever able to get past the perception that the only way it can be of value is to lay golden eggs? Apple certainly has enough cash reserve to simply expand its business to increase revenue to boost its value. Amazon is doing it every week through acquisitions. It just seems as though Apple has the financial ability to move in any number of directions. It’s not exactly locked into doing just one or two things. I find it scary to hear some dude say Apple can only go but so far in share price when the company is barely doing anything with its cash reserve in terms of expansion. Apple can certainly reinvent itself again. Is there really anything preventing that from happening that I’m not aware of?

    1. One might suppose that it’s the lack of eccentricity in Apple’s leadership. Plenty of strong do-ers, not as much on the dreamers, at least as far as we’ve seen lately. I don’t deify Jobs, but it’s hard to argue that when he knew what he wanted, he made things happen.

      Then again, I also don’t villify Tim Cook. Maybe at this point in time even Jobs would have been struggling to come up with the next great break-out device.

      Even the greatest of companies go through cycles.

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