Last week, news broke via SEC filings that large investors like Warren Buffett had sold tens of millions of shares of technology giant Apple during the latest quarter. Berkshire Hathaway’s sale led an overall decline in the amount of Apple stock held by major firms in the final calendar period of 2020.
However, the data provided doesn’t tell the whole story, and it actually represents a positive for the stock. When combined with the recent pullback in shares, I believe Apple presents a buying opportunity currently.
On the face of it, this Apple data might look quite bearish. A net sale of more than 100 million shares might indicate to some that major investors are losing faith in this name. However, we have to dig into the company’s 10-Q filing for a key point that makes the data look quite different. It has to do with Apple’s major share repurchase program:
During the three months ended December 26, 2020, the Company repurchased 200 million shares of its common stock for $24.0 billion.
So when you think of Apple holders selling 109 million shares, keep in mind that the company’s outstanding share count came down by over 150 million shares in the fiscal period. This isn’t the first time we’ve seen bearish institutional data presented that looks much different thanks to the buyback, and I’m sure it won’t be the last time either. Apple has taken down the outstanding share count by more than 715 million shares in the past year, so that’s a good chunk of supply removed from the market. It’s natural to think that institutions will have to sell more over time as management further buys back stock.
MacDailyNews Take: Apple stock buying opportunities are buying opportunities for both investors and Apple’s capital expenditure program which gives the company more buybacks for their buck. As the Mother of All iPhone Super Cycles, a multi-year affair, has just begun, as have COVID-19 vaccine distribution and the economy reopens, Apple is well-positioned, especially with a weaker dollar.