Investing Thread

[The Sultan]

Yeah I think this is much less a "government knows what I'm doing" issue, and way more a "opening multiple doors for bad actors" issue.

[Skatastrophy]

gee, speaking of dictators, this looks to be kind of dictatorship-like


    https://www.marketwatch.com/press-release/ncla-unleashes-lawsuit-to-take-down-sec-s-illegal-mass-data-collection-machine-4fd96800

  but not weekend at Bernie's sec...noooooo, say it ain't so unless he's using it to further unify us.  what 4th amendment

A press release from a far right litigation machine trying to bring down america's regulatory bodies. Great

[MU82]

A TikTok ban, if it happens, would benefit Alphabet and Meta.

I already have a lot of GOOGL, my largest position among non-dividend-paying stocks. But I still think it's at worst fairly valued with lots of room to run, so I'm trying to decide on a price at which I'd be willing to add more. META ... I missed that missile's climb and not sure I want to try to jump on as it speeds upward. That happens; can't own everything.

Meanwhile, TSLA is soaring today after Musk claimed it's not a car company but a "robotics A.I. company." The analysts ate that up.

[TSmith34, Inc.]

A TikTok ban, if it happens, would benefit Alphabet and Meta.

I already have a lot of GOOGL, my largest position among non-dividend-paying stocks. But I still think it's at worst fairly valued with lots of room to run, so I'm trying to decide on a price at which I'd be willing to add more. META ... I missed that missile's climb and not sure I want to try to jump on as it speeds upward. That happens; can't own everything.

Meanwhile, TSLA is soaring today after Musk claimed it's not a car company but a "robotics A.I. company." The analysts ate that up.

Same here with GOOGL and META. Don't own any of the latter directly, but have plenty through various funds and ETFs.

Yes, the last thing Musk wants is for his TSLA to viewed as a car company and be valued at a similar multiple. But what silly bullshit for people to fall for. AI! Robotaxis! (only not robotaxis, they'll have human drivers...so Telsauber). Low-priced models! (only not new models, just super stripped down versions of existing models). Good luck, shareholders.

[jesmu84]

https://www.fastcompany.com/90677822/elon-musks-tesla-robotaxi-promise-typifies-self-driving-overexuberance

Are those the same robotaxis that were supposed to arrive by end of 2020?

Musk knows as long as he keeps making promises/predictions, regardless of actual results, people will eat it up

[MU82]

That's part of his genius!

[lawdog77]

That's part of his genius!

He made $10 billion  with the stock gaining value. 3D chess.

[Skatastrophy]

5% profit margins... exactly like the rest of the auto industry.

[TSmith34, Inc.]

5% profit margins... exactly like the rest of the auto industry.

But...AI!

[SoCalEagle]

How about them AAPLs?

During their earnings call yesterday AAPL announced another share buyback.  This one is for $110 Billion.  By my calculation that's approxmaitely 7.5% of the entire company.  And that's on top of the $90 Billion share buyback that was announced last year and is still ongoing.  In the last ten years AAPL has bought back approximately 9 billion shares, while 15.5 billion remain outstanding.  Wonder if this will drive the price of AAPL much higher? 

Oh yeah, and they're gonna do some AI stuff, too. 

[jesmu84]

Stock buybacks should be illegal

[Skatastrophy]

How about them AAPLs?

During their earnings call yesterday AAPL announced another share buyback.  This one is for $110 Billion.  By my calculation that's approxmaitely 7.5% of the entire company.  And that's on top of the $90 Billion share buyback that was announced last year and is still ongoing.  In the last ten years AAPL has bought back approximately 9 billion shares, while 15.5 billion remain outstanding.  Wonder if this will drive the price of AAPL much higher? 

Oh yeah, and they're gonna do some AI stuff, too. 

I wonder if this is an opportunity for them to repatriate cash. Last i read into their financials they had a lot of cash in foreign countries that they hadn't brought back to the US so that they could avoid a taxable event. I don't know a lot about the technical aspects of stock buybacks.

[JWags85]

Stock buybacks should be illegal

Ok comrade.  Do you realize how much cash reserves Apple is sitting on?  Though I'm sure you'd rather they be forced to give that up so others can do what they deem is best for that money.

Some buybacks are absurd and detrimental, but making a blanket statement like that sounds like hysterical screaming at the EVIL CORPORATE CLOUDS.  Even your democratic socialist utopias in Scandinavia don't outlaw them.  I specifically read about significant buybacks in Norway and Denmark in Q1.

[MU82]

I don't love buybacks. The often are executed when the stock price is overvalued rather than undervalued, and they mostly benefit the largest shareholders - in other words, upper management and institutions.

As for AAPL's buyback, I have a decent-sized stake - thanks Douchey! - but I really won't benefit much. Personally, I'd have preferred a larger dividend increase.

The buyback IS a major reason why the stock price is well higher today IMHO, because it wasn't really a great earnings report.

One of the more interesting reports this week was turned in by Amgen, which talked about progress with the weight-loss drug it's working on. That helped push the price up 13%, which is pretty wild. It's one of my bigger holdings (though not quite as large as AAPL), so I'm not disappointed.

[JWags85]

I don't love buybacks. The often are executed when the stock price is overvalued rather than undervalued, and they mostly benefit the largest shareholders - in other words, upper management and institutions.

I dont disagree with the biggest of the sentence, but this is silly.  It benefits all shareholders equally (on a percentage basis).  It not like a shareholder only gets stock price appreciation if they have a 7 figure position or above.  10% is 10%.  Parsing stock price activity because larger positions means larger profits is bizarre to me.

[MUBurrow]

I dont disagree with the biggest of the sentence, but this is silly.  It benefits all shareholders equally (on a percentage basis).  It not like a shareholder only gets stock price appreciation if they have a 7 figure position or above.  10% is 10%.  Parsing stock price activity because larger positions means larger profits is bizarre to me.

I mostly agree, but I think there are a lot of times where a board approves a buyback with an eye toward its stock ledger, too.  E.g. if a company has a relatively high proportion of outstanding shares from exec compensation or past mergers, the board knows that when they consider a buyback vs dividend or other uses for the cash.  I think buybacks can sometimes be used to help founders and execs get liquid without having to sell their shares and raise questions of confidence in the company.

[JWags85]

I mostly agree, but I think there are a lot of times where a board approves a buyback with an eye toward its stock ledger, too.  E.g. if a company has a relatively high proportion of outstanding shares from exec compensation or past mergers, the board knows that when they consider a buyback vs dividend or other uses for the cash.  I think buybacks can sometimes be used to help founders and execs get liquid without having to sell their shares and raise questions of confidence in the company.

For sure, nothing you said here is out of bounds and no doubt a buyback can be a way for management to print money for themselves in a way.  I just don't subscribe to the notion that shareholders and "large shareholders" need to be separate in any way to make it look any worse.

[jesmu84]

Ok comrade.  Do you realize how much cash reserves Apple is sitting on?  Though I'm sure you'd rather they be forced to give that up so others can do what they deem is best for that money.

Some buybacks are absurd and detrimental, but making a blanket statement like that sounds like hysterical screaming at the EVIL CORPORATE CLOUDS.  Even your democratic socialist utopias in Scandinavia don't outlaw them.  I specifically read about significant buybacks in Norway and Denmark in Q1.

When we have the same social services, union support and tax structure as the Scandinavians, I'll likely have a different opinion on stock buybacks

[Shaka Shart]

Ok comrade.  Do you realize how much cash reserves Apple is sitting on?  Though I'm sure you'd rather they be forced to give that up so others can do what they deem is best for that money.

Some buybacks are absurd and detrimental, but making a blanket statement like that sounds like hysterical screaming at the EVIL CORPORATE CLOUDS.  Even your democratic socialist utopias in Scandinavia don't outlaw them.  I specifically read about significant buybacks in Norway and Denmark in Q1.

Yes Apple should pay more for sitting on a pile of cash that's the size of a GDP of a top 60 economy in the world.

Wouldn't you say making it more incentivized for companies spend on capital investment and organic growth prospects is healthier for our long term economy than juicing executive comp packages and stock prices temporarily?

Buybacks were considered market manipulation until the 1980s. Wonder why.

[MU82]

For sure, nothing you said here is out of bounds and no doubt a buyback can be a way for management to print money for themselves in a way.  I just don't subscribe to the notion that shareholders and "large shareholders" need to be separate in any way to make it look any worse.

We'll agree to agree with your first sentence and agree to disagree with your second.

[JWags85]

When we have the same social services, union support and tax structure as the Scandinavians, I'll likely have a different opinion on stock buybacks

So you don't have a problem with buybacks as long as other government and societal situations are what you want.  Got it, so buybacks aren't the actual issue for you.  Glad you cleared that up

Yes Apple should pay more for sitting on a pile of cash that's the size of a GDP of a top 60 economy in the world.

Wouldn't you say making it more incentivized for companies spend on capital investment and organic growth prospects is healthier for our long term economy than juicing executive comp packages and stock prices temporarily?

Buybacks were considered market manipulation until the 1980s. Wonder why.

If Apple paid a much larger tax rate...they would still have a GDP pile of cash.  It's what happens when you print money for years and make tons of money with essentially no variable cost (via the App Store).  I was more thinking the idea of "Apple shouldn't have that cash right now" and thinking it should be thus redistributed further, which I read multiple think pieces about over the years and think is crazy.

And as I said, not all buybacks are created equal.  I don't know what expectations for capital investment and organic growth you have for one of the biggest and most profitable companies in the world, not to mention it's not an either/or.  They have plenty of money to do both.

Like most things, I take it on a case by case basis.  And this has very little to do with other buyback scenarios.

[Shaka Shart]

So you don't have a problem with buybacks as long as other government and societal situations are what you want.  Got it, so buybacks aren't the actual issue for you.  Glad you cleared that up

If Apple paid a much larger tax rate...they would still have a GDP pile of cash.  It's what happens when you print money for years and make tons of money with essentially no variable cost (via the App Store).  I was more thinking the idea of "Apple shouldn't have that cash right now" and thinking it should be thus redistributed further, which I read multiple think pieces about over the years and think is crazy.

And as I said, not all buybacks are created equal.  I don't know what expectations for capital investment and organic growth you have for one of the biggest and most profitable companies in the world, not to mention it's not an either/or.  They have plenty of money to do both.

Like most things, I take it on a case by case basis.  And this has very little to do with other buyback scenarios.

Fair enough, my source of concern comes from the rate of internal investment. It crashed in 2008-2009 and has not crept back up.

That plus consistent massive buy backs to juice stock prices has me concerned for the longevity of the robustness of our innovative economy. You can only wring a rag so much.

Buybacks do nothing for my view that short term growth investing decisions have all but completely encapsulated the economy at our longer term future expense.

[SoCalEagle]

Fair enough, my source of concern comes from the rate of internal investment. It crashed in 2008-2009 and has not crept back up.

That plus consistent massive buy backs to juice stock prices has me concerned for the longevity of the robustness of our innovative economy. You can only wring a rag so much.

Buybacks do nothing for my view that short term growth investing decisions have all but completely encapsulated the economy at our longer term future expense.

I'm not sure about this statement, although in some ways I have the same question about buybacks as you do.  On the other hand, are not shareholders supposed to be rewarded for taking a risk on the performance of the company?  What better way to be rewarded than to share in the profits / earnings of the company through share buybacks and distribution of dividends? And what if AAPL believes it is investing the proper amount of capital into R&D for this moment in time?  They know much more than I do about how best to put the profits of the company to work.  Therefore, just like you, I have questions about the size of the AAPL buybacks, but I can't really fault them for their approach to date.  It has worked out really well for me and other shareholders, right? 

[JWags85]

I'm not sure about this statement, although in some ways I have the same question about buybacks as you do.  On the other hand, are not shareholders supposed to be rewarded for taking a risk on the performance of the company?  What better way to be rewarded than to share in the profits / earnings of the company through share buybacks and distribution of dividends? And what if AAPL believes it is investing the proper amount of capital into R&D for this moment in time?  They know much more than I do about how best to put the profits of the company to work.  Therefore, just like you, I have questions about the size of the AAPL buybacks, but I can't really fault them for their approach to date.  It has worked out really well for me and other shareholders, right?

I agree with this.  Thats sort of what I was getting at in my rebuttals to 82 above.  For better or for worse, stock movements/buybacks/etc... get viewed in the lens of hedge funds/upper management and retail investor perspective get lost in the wash.

[MU82]

SoCal and Wags: My feeling is that dividends are the better way to reward shareholders, but I appreciate the conversation.