What's Wrong With Apple (stock)?

[Tugg Speedman]

I have never owned gold, for the following reason: No Yield.  In my mind, you have to be a trader and sell high to make a profit.  Also, Gold trades more like a currency than a commodity.

So, that is how I think.  Please tell me if I'm wrong, especially on the zero yield and you have to be a buyer and seller of gold to make it a worthy investment. Because of this I prefer real estate (rental not vacant land), bonds and stocks.  I want my money making money even if I don't sell (because frankly, I don't sell often and I am not a trader). 

I see gold as too up and down and it does strange things and appears rather unpredictable.

You're exactly correct.

HOWEVER ... $8 trillion dollars of government interest rates now have negative yields worldwide.  65% is in Japan (most of their bond market is now negative) and the rest is in Europe (Germany and France leading the way).  Switzerland has rates approaching -2% (lowest ever recorded in human history).

So, in this upside down world, a 0% yield is a high yield alternative! This is precisely why gold is soaring, and with the expectations that negative rates will be around for years (per recent central banker statements) this will benefit gold.

[ChicosBailBonds]

That was on April 18

27 analyst of Wall Street have DIS price targets.  Average $110.48 (last $105.65)
19 Buys
14 Holds (which is Wall Street talk for Sell)
2 Sells (which means Sell Now!!!)

Last analyst changes

May 6, RBS Neutral, target $103
May 5, Cowen, Sell, target $88
May 3, Drexel Hamilton, Buy, target $118
May 2, Jeffries, Hold target $92
May 2, Bernstein, Hold, target $110
May 1, Piper Jaffrey, Buy, target $120
May 1, FBR Capital Markets, Buy, $111

seems like Wall Street is all over the place on DIS.  And that is just the last week!

Actually it was April 25th

[Dr. Blackheart]

Would have said MNST earlier this week. Two of top sellers out of 10 items for immediate consumption at Cstore and Gas. Took off big with a beat recently, but I think they are poised to break out over historical highs. Will Coke buy them with distribution agreements already in place?

MNST up another $4.31 today...up $30 since end of April. Close to a breakout of their historical ceiling. STZ up to $163 (another 2.38 today).  MCD at an all time high as our many others in food and beverage. Money has been flowing into this sector as it is safer in a softening economy, per below.



https://www.chicagofed.org/research/data/cfnai/current-data

[Lennys Tap]

UBS puts buy target for DIS at $116

DIS misses on earnings, revenues. Down 6% in the after market, trading around 100.

[Warriors, Come Out and Playeeyay]

MNST up another $4.31 today...up $30 since end of April. Close to a breakout of their historical ceiling. STZ up to $163 (another 2.38 today).  MCD at an all time high as our many others in food and beverage. Money has been flowing into this sector as it is safer in a softening economy, per below.

You're on a roll Dr. Blackheart!  Keep giving stock tips to help fellow MU'ers!

[Tugg Speedman]

Apple slammed again today, thanks to the story below ... now under $90. 
This means Alphabet (Google) is now the largest market cap company



May 12, 2016 12:20 am JST
Apple suppliers face bleak year as demand for iPhone 7 weak

http://asia.nikkei.com/Business/AC/Apple-suppliers-face-bleak-year-as-demand-for-iPhone-7-weak

Taiwan's tech suppliers will get significantly fewer orders from Apple Inc. in the second half of this year compared with a year ago, no thanks to an ongoing slump in demand for premium smartphones and a lack of groundbreaking features for the upcoming iPhone 7, sources familiar with the matter told the Nikkei Asian Review.

"Suppliers are saying that they are getting fewer orders for the second half of this year compared with the year-ago period," a source said. "The traditional peak season this year will not be able to compare to the past few years."

Another source said that for Taiwan Semiconductor Manufacturing Company, the sole supplier for the latest A10 chips used in iPhone 7, its iPhone 6s and iPhone 7 chip shipments for the June to December period will likely shrink to 70%--80% of the level reached in the second half of 2015.

[ChicosBailBonds]

Warren Buffett putting a ton of money into Apple.

[Tugg Speedman]

Warren Buffett putting a ton of money into Apple.

Actually he is not, it is new Lieutenants they are doing it.  And it is not a ton of money.  It's a small amount for Berkshire and small amount for Apple.

They bought in it the first quarter with an average price of $99.  Closed at $93.88 today.

This is Berkshire's second big technology investment.  The first was IBM.

Berkshire started acquiring IBM in Q1 2011.  He has amassed a $12 billion position with an average cost of $154.  Last price is $149, so Buffett is sitting on a small loss.

Over the same period (Q1 2011 to April 30, 2016) the S&P 500 total return is exactly 100%.  So Buffett managed a small loss while the market doubled.

Sum it up and good luck with the Apple position Warren.


-----------------

David Tepper, Cal Icahn, Julian Robertson, and Leon Cooperman, all extremely successful billionaire investors, sold all their Apple stock at the same time Buffett was buying.

[ChicosBailBonds]

$1 billion investment is large in my book.

[MU82]

$1 billion investment is large in my book.

Agreed. That's almost twice what my entire portfolio is worth!

[Tugg Speedman]

$1 billion investment is large in my book.

Everything is relative.  For a $500 billion company and an investor with hundreds of billions under management, it is a small investment.

[ChicosBailBonds]

Everything is relative.  For a $500 billion company and an investor with hundreds of billions under management, it is a small investment.

It's his second largest position...yes?   Thus, big

[Lennys Tap]

Agreed. That's almost twice what my entire portfolio is worth!

Damn, Mike - and I thought you were a player!

[Tugg Speedman]

It's his second largest position...yes?   Thus, big

Now even close.

If you include his public holdings only, around 16th

1. Kraft - $25B
2. Wells Fargo - $23B
3. Coke - $19B
4. IBM - $12B
5. AMEX - $9B
6. Phillips 66 - $6.5BB
7. Wal-Mart - $3.7B
8. US Bancorp - $3.5B
9. Davita - $2.8B
10. Moodys - $2.4B
11. Charter - $2.1B
12. Deere - $1.8B
13. Goldman - $1.8B
14. GM - $1.6B
15. Verisign - $1.2B
16. Apple $1.07B
17. USG - $1.0B

Of course he owns 100% of about 80 companies outright (Berkshire, Fruit of the Loom, Nebraska Furniture Mart, Dairy Queen, Marmom Group, Business Wire, Clayton Homes,. Netjets, Lubrizol, Johns Manville, Helzberg Diamonds, General Re, Geico, FlightSafety, See's Candies, Duracell, Burlington Northern,  Benjamin Moore... and about 60ish more).   Include these and Apple is not in the top 30.

And this does not count various non-stock bets like perferreds, loans (which he will do with Yahoo) derivatives, silver, bonds etc.

As of March 31, 2016  - Berkshire had total assets of $427 billion.  Apple is worth $500 billion.  viewed this way, a $1 billion position is not that significant.

It's an after-thought for for him.  And again, it was not even him anyway.  He 83 and has two portfolio managers working for him becasue many investors are worried if he assumes room temperature.  They initiated this position.

[Jay Bee]

Stock up about 4.5% since Heis's post re: below $90 on Thursday.. a couple of trading days can make a difference when you pick-n-choose, a''ina? #PraiseCook

[Tugg Speedman]

Stock up about 4.5% since Heis's post re: below $90 on Thursday.. a couple of trading days can make a difference when you pick-n-choose, a''ina? #PraiseCook

Nope, this thread was started at $93.74 as the price was listed in the first post (April 30).  Needed Uncle Warren to raise the dead and get it to close at $93.88 yesterday.  This thread is 14 cents under water.

Also remember Uncle Warren's cost is $99 so he is 5% underwater.

[MU82]

Here's something Heisy and other market followers should appreciate ...

On Monday, The Street posted an article headlined: "5 Safe, Stable Stocks with Big Upside Potential."

The companies it named were Hormel, Verizon, Sanderson Farms, UnitedHealth and AT&T.

https://www.thestreet.com/story/13572639/1/5-defensive-stocks-with-big-upside-potential.html?puc=yahoo&cm_ven=YAHOO

On Tuesday, The Street posted an article headlined: "These 5 Defensive Stock Picks Aren't as Safe as They Seem."

You'll never guess which 5 companies they named!!!

https://www.thestreet.com/story/13573027/1/these-5-defensive-stock-picks-aren-t-as-safe-as-they-seem.html?puc=yahoo&cm_ven=YAHOO

Hilarious ... to anybody who didn't invest in the 5 "safe" companies based upon Monday's article.

Then again, if one invests based upon something the yahoos at The Street say, one gets what one deserves.

[GGGG]

Isn't Berkshire buying up a bunch of Apple stock a sign that Warren views it more of a value company than a growth one?

[Coleman]

Isn't Berkshire buying up a bunch of Apple stock a sign that Warren views it more of a value company than a growth one?

Probably. But pretty much any stock that has that large of a dividend is a "value" stock (http://www.fool.com/investing/general/2016/05/16/apples-dividend-makes-the-stock-a-bargain.aspx)

But it is also a sign that he thinks it is a bargain. I'd say its an undervalued value stock. It doesn't have massive growth potential, but it is still selling at a discount. He might have some paper losses since he bought, but I'm sure he's confident that the stock will erase those losses.


One of my favorite quotes from Mr. Buffett (from his 2013 letter):

"It should be an enormous advantage for investors in stocks to have wildly fluctuating valuations
placed on their holdings – and for some investors, it is. After all, if a moody fellow with a farm bordering my
property yelled out a price every day to me at which he would either buy my farm or sell me his – and those prices
varied widely over short periods of time depending on his mental state – how in the world could I be other than
benefited by his erratic behavior? If his daily shout-out was ridiculously low, and I had some spare cash, I would
buy his farm. If the number he yelled was absurdly high, I could either sell to him or just go on farming.
Owners of stocks, however, too often let the capricious and often irrational behavior of their fellow owners
cause them to behave irrationally as well. Because there is so much chatter about markets, the economy, interest
rates, price behavior of stocks, etc., some investors believe it is important to listen to pundits – and, worse yet,
important to consider acting upon their comments"

[ChicosBailBonds]

Now even close.

If you include his public holdings only, around 16th

1. Kraft - $25B
2. Wells Fargo - $23B
3. Coke - $19B
4. IBM - $12B
5. AMEX - $9B
6. Phillips 66 - $6.5BB
7. Wal-Mart - $3.7B
8. US Bancorp - $3.5B
9. Davita - $2.8B
10. Moodys - $2.4B
11. Charter - $2.1B
12. Deere - $1.8B
13. Goldman - $1.8B
14. GM - $1.6B
15. Verisign - $1.2B
16. Apple $1.07B
17. USG - $1.0B

Of course he owns 100% of about 80 companies outright (Berkshire, Fruit of the Loom, Nebraska Furniture Mart, Dairy Queen, Marmom Group, Business Wire, Clayton Homes,. Netjets, Lubrizol, Johns Manville, Helzberg Diamonds, General Re, Geico, FlightSafety, See's Candies, Duracell, Burlington Northern,  Benjamin Moore... and about 60ish more).   Include these and Apple is not in the top 30.

And this does not count various non-stock bets like perferreds, loans (which he will do with Yahoo) derivatives, silver, bonds etc.

As of March 31, 2016  - Berkshire had total assets of $427 billion.  Apple is worth $500 billion.  viewed this way, a $1 billion position is not that significant.

It's an after-thought for for him.  And again, it was not even him anyway.  He 83 and has two portfolio managers working for him becasue many investors are worried if he assumes room temperature.  They initiated this position.

Thank you

I would clarify one thing.  Yes, Berkshire's total assets are around half a billion, but their stock holdings are about $128 billion. 

[Lennys Tap]

Thank you

I would clarify one thing.  Yes, Berkshire's total assets are around half a billion, but their stock holdings are about $128 billion.

Half a billion in assets? Close. Your only off by a measly $450 billion.

[Tugg Speedman]

Half a billion in assets? Close. Your only off by a measly $450 billion.

And each quarter Berkshire makes about $50 billion in revenues, and about $5.5 billion in net income.  So if their $1 billion Apple investment instantly went to zero, they would not even have a loss this quarter.

The point again, is this is a rounding error investment.  But because it is Warren and Apple, we have to make it a much bigger deal than its economic meaning would suggest.

[MU82]

The point again, is this is a rounding error investment.  But because it is Warren and Apple, we have to make it a much bigger deal than its economic meaning would suggest.

I understand what you're saying, and I agree with your general thesis.

Nevertheless, Buffett/BRK could have taken their billion bucks and bought any number of other companies. He/they chose Apple.

Of course it's "news," whether you want to admit it or not.

[Jay Bee]

The point again, is this is a rounding error investment. 

Ridiculous.

[ChicosBailBonds]

Half a billion in assets? Close. Your only off by a measly $450 billion.

Half a trillion.  Sorry, typing fast before going to work.  Half a billion we used to do about every two months...or as my old boss would say, "you're on the hook for $8 million a day come hell or high water".    Never missed in 6 years.