Why Tim Cook wants mom and pop to buy Apple

“Apple’s (AAPL) CEO, Tim Cook has been channeling Steve Jobs recently,” Cheryl Swanson writes for Seeking Alpha. “In the company’s Q1 earnings call, Cook pulled off a major surprise. The strong second-quarter results took a backseat to a slew of other bids to appease investors. The biggest surprise, however, came when Cook announced a 7-for-1 stock split that should ‘make Apple stock more accessible to larger numbers of shareholders.'”

“It was a piece of theatre reminiscent of Apple’s founder Steve Jobs, who was legendary for sniffing the wind, sensing what lay ahead, and then making a move that surprised everyone. (And often sent the stock on an insane run.) It wasn’t merely a surprise, however, it was a signal from the tech giant’s current CEO that Apple is changing direction. After a year of getting bullied and bruised by Wall Street pros, Cook has decided it’s time to expand his audience,” Swanson writes. “Cook’s latest target is a segment of the investing public that is not only a lot easier to please, but who is coming back in force. Namely, America’s mom-and-pop investors.”

“Cook’s timing is impeccable. Discount brokerages TD Ameritrade and E-TRADE Financial Corporation both reported sizable trading volume jumps in the first quarter this year, a key indication that retail investors are getting more active. ETRADE reported 33 percent more volume, while TD Ameritrade reported a 30 percent rise, according to a Wall Street Journal report,” Swanson writes. “It’s also a remarkable about-face for Tim Cook. Just two years ago, Cook told shareholders stock splits were a lousy idea. He insisted they would be bad for the stock, and in the long run accomplishing nothing. In other words, in his past incarnation, Tim Cook was strongly against a stock split. But that was before the company faced reality. Ever since Steve Jobs died on October 5, 2011, hedge funds have become increasingly uncomfortable holding the stock. As Morgan Stanley’s chief Apple analyst, Katy Huberty said in 2012, “hedge funds treat Apple like junk.””

Read more in the full article here.