shares Stories November 2, 2015

AAPL: 121.18

1.68

Another reason you might want to hide one of the iPhone’s default apps: your financial health …

With Apple not allowing us to delete its pre-installed iPhone apps, may of us take to hiding them away inside a folder on the ‘back’ screen where they at least don’t get in the way. But a report in the WSJ suggests there’s another reason you may want to hide the Stocks app: using it too often can lead you to make poor investing decisions.

The report references a phenomenon known as myopic loss aversion, in which people are likely to sell stocks when they see frequent downward movements – even if the long-term trend is up.

When people are frequently told how their investments are doing—say, if they are given a daily update on their long-term investments, by smartphone or any other digital device—they are more likely to make poor financial decisions and possibly sell at the wrong time.

The reason frequent checks are risky is that the more often you look, the greater the chance you’re going to see a drop in the price. And that has nothing to do with the stock’s performance, it’s just stats.

If you check every single day, there’s a roughly 47% chance that the market will have gone down, based on its past movements. But what happens if you check once a month? The numbers will start to look a little better, as the market will only have gone down 41% of the time. Years are better still, as the S&P generates a positive return seven years out of every 10. And if you check once a decade, then you’re only going to get bad news about 15% of the time.

So if you want to make the best investment decisions, it seems the smart money is on leaving the Stocks app well alone.

Apple has come under criticism for continuing to offer a 16GB iPhone in 2015, but defended the decision on the basis of cloud storage and app thinning.

shares Stories February 10, 2015

Apple becomes 1st company ever to close at market cap of over $700B (AAPL)

Update 2/11: After passing $700 billion in market capitalization yesterday, Apple has been trading up as high as $124.43 a share raising market cap over $720 billion.

Apple’s stock price closed up 2.3 points today to close at 122.02 giving the Cupertino company that was on the verge of bankruptcy less than 2 decades ago, the highest market cap of all time. The closing market cap of $710B reflects significant growth since it hit a recent low of a split-adjusted 56 in mid-2013.

To put it into perspective, Apple is now valued at $100 for every man, woman and child on the face of the earth.

Speaking of AAPL, Tim Cook is at Goldman Sachs today discussing Apple’s recent success and announcing a industry first Solar farm that will offset all of Apple’s California electricity use including its Campus 2, offices and 40 retail stores. 

And on that note, First Solar, the company that is partnering with Apple on the Solar Farm is up almost 10% on the news.

shares Stories April 29, 2014

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Investors seem to have taken heed of analyst ratings in response to the higher-than-predicted earnings Apple reported last week, the share price climbing from $524.75 before the company released its financials to approaching $600 at the time of writing.

Fortune suggests Apple’s results isn’t the only factor at play, with investors perhaps also following Greenlight Capital’s lead in moving out of other tech stock with particularly high price to earnings ratios – the measure of how a share price relates to its earnings. The higher the P/E ratio, the more over-valued it looks according to traditional measures …  expand full story

shares Stories October 24, 2013

Following an announcement yesterday from billionaire investor Carl Icahn that he had sent a letter to Apple CEO Tim Cook and would post the full letter online today, Icahn’s new website has now officially launched with the full text of the letter. In the letter on Icahn’s new website called the Shareholders’ Square Table, the investor urged Tim Cook to implement the $150 billion buyback plan that he has been suggesting since first announcing in August that he had taken a “large position” in Apple:

The S&P 500 trades at roughly 14x forward earnings. After backing off net cash, Apple trades at just 9x (not factoring into account that the company has a significantly lower cash tax rate than the rate Wall Street analysts use). This discount (cash adjusted) becomes even more compelling given our confidence that Apple will grow earnings per share at a rate well in excess of the S&P 500 for the foreseeable future. With such an enormous valuation gap and such a massive amount of cash on the balance sheet, we find it difficult to imagine why the board would not move more aggressively to buy back stock by immediately announcing a $150 Billion tender offer (financed with debt or a mix of debt and cash on the balance sheet).

While this would certainly be unprecedented because of its size, it is actually appropriate and manageable relative to the size and financial strength of your company. Apple generates more than enough cash flow to service this amount of debt and has $147 billion of cash in the bank. As we proposed at our dinner, if the company decided to borrow the full $150 billion at a 3% interest rate to commence a tender at $525 per share, the result would be an immediate 33% boost to earnings per share, translating into a 33% increase in the value of the shares, which significantly assumes no multiple expansion. 

In the letter Icahn adds that if the proposed $150 billion buyback was executed immediately, Apple would experience “further stock appreciation of 140% for the shareholders who choose not to sell into the proposed tender offer.” Icahn also agrees to not participate in the buyback by withholding his shares to “ invalidate any possible criticism” regarding the long term benefits of the proposal.

Icahn also noted that he has increased the size of his position in AAPL from 3,875,063 shares to 4,730,739 shares, a value of around $2.5 billion, and that he intends to buy more.

While there isn’t a ton of new information regarding Icahn’s new website, it is already accepting sign ups and a description on the website explains it as “a platform from which we can unite and fight for our rights as shareholders and steer towards the goal of real corporate democracy.”

Icahn says that Cook will call him after the October 28th earnings announcement.

Icahn’s full letter to Tim Cook is below:

expand full story

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