“Here’s your chance! Investors itching to buy stocks on a dip in the S&P 500 index will likely have a window of opportunity to strike within the next three weeks as corporations enter a blackout period for buybacks,” Wallace Witkowski reports for MarketWatch.
“As earnings season approaches, U.S. companies are required to refrain from discretionary buybacks during a so-called blackout period that lasts from about five weeks before their respective earnings reports to about 48 hours after earnings are reported, notes Amanda Sneider, portfolio strategist at Goldman Sachs,” Witkowski reports. “In a recent client note, Goldman trumpeted this pause on buybacks as a great opportunity for investors.”
Witkowski reports, “Given that a substantial amount of stock demand originates from corporate buybacks programs, Goldman reasons the blackout period will weaken the price of stocks with active buyback programs going into earnings season.”
Read more in the full article here.
MacDailyNews Note: Among Goldman’s recommendations is Apple Inc. (AAPL) Apple Inc., due to report Q215 earnings on April 21st.
Do I buy stock in Apple like I would anyway or do I run away screaming because Goldman Sachs wants me to?
Despite what the MDN comment says Apple has not announced the second quarter earnings announcement date yet. Historically it has been the first Tuesday after the monthly options expiration date which would be April 21st. However, I would assert that this April is different. Apple Watch sales start on April 24th and part of earnings announcements is earnings guidance for the quarter. I think Apple would be hesitant to give such guidance without the information obtained from the opening weekend sales to see how well it matches their internal projections. Therefore, I believe Apple will make their earnings announcement on Tuesday, April 28th.
Also concerning the share buyback blackout, it refers to “discretionary buybacks” which I assume would be Apple itself going into the market to buy shares as it did before when Apple dropped significantly after an earnings announcement. I believe the standard buyback program Apple uses is a contract one with financial firms that buy back shares over time based on a best effort type contract. I don’t think this would come under a discretionary limitation so Apple’s normal buyback program should continue operating during the blackout period. Anyone out there know more about this or whether what I’m saying is correct?
Since the pre-orders start on April 10th for Apple Watch, I expect they will have a pretty good idea about initial demand by April 21. Maybe this is one reason why the pre-orders start long before it’s available?
On the off-chance the pre-orders are very low for Apple Watch, they might want to wait until after the actual opening weekend to gauge interest. I think the first scenario is more likely. They will probably gauge interest off the pre-orders alone.
I believe the long pre-order time is to give a reasonable amount of time for in store try-ons prior to the actual sales start. This is unlike trying on a cellphone.
While pre-orders will give a lot of information, actual sales in store with additional band buys, etc., would be much more reliable and give more in depth information. Basing earnings projections on just online pre-orders when a few days wait will give actual sales data would seem prudent. Also, delaying the earnings announcement would allow Apple time to spin the story and provide better guidance if sales are disappointing or less than they forecast.
April 21st they will announce and then make a follow up announcement witht he Watch after the weekend following launch or when they hit X Number …..
Apple for sure won’t let the Watch dictate the earnings announcement date, my opinion only …..
One thing for sure, we will know soon enough!
Why don’t the wall street criminals ever have a blackout period to not rig the market?
I hate to think of where Apple stock might be without the aggressive buybacks. It seems as though the only thing propping up Apple stock is Apple itself and also Carl Icahn. I simply do not trust Wall Street at all as those people chase after fundamentally poor stocks on the odd chance of fantastic growth. Google’s share price rises over 2.5% because they got a new CFO. C’mon, people, is this what investing is all about?