abyli Posted February 4, 2017 Share Posted February 4, 2017 I sold 48% of my AAPL equity last week (not based on the VIC writeup.) Not sure if it's correct to look at it like this but from a cash flow standpoint, I got around 78% of my investment back (including reinvested divvies) so I'm not playing with the house's money but I figure that a ton of downside has been removed. I second abyli "please short it down..." Apple is a great company with cheap valuation. Right business, great culture, right people, right price. Wall street treats Apple as a hardware company, which is far away from reality. Apple is an eco system. Apple is the only company who can put together hardware, software, service to create perfect user experience. Microsoft and Google finally get it and have been trying to copy Apple's business model, but no chance. Now car industry is facing once in 100 years change. Again, Apple might be the only company who can put together everything for a perfect experience with Electric-cars, Self driving and Ride sharing... Link to comment Share on other sites More sharing options...
DooDiligence Posted February 4, 2017 Share Posted February 4, 2017 I sold 48% of my AAPL equity last week (not based on the VIC writeup.) Not sure if it's correct to look at it like this but from a cash flow standpoint, I got around 78% of my investment back (including reinvested divvies) so I'm not playing with the house's money but I figure that a ton of downside has been removed. I second abyli "please short it down..." Apple is a great company with cheap valuation. Right business, great culture, right people, right price. Wall street treats Apple as a hardware company, which is far away from reality. Apple is an eco system. Apple is the only company who can put together hardware, software, service to create perfect user experience. Microsoft and Google finally get it and have been trying to copy Apple's business model, but no chance. Now car industry is facing once in 100 years change. Again, Apple might be the only company who can put together everything for a perfect experience with Electric-cars, Self driving and Ride sharing... I agree (my position had grown a bit more than I was comfortable with & I was just downsizing.) Link to comment Share on other sites More sharing options...
portfolio14 Posted February 6, 2017 Share Posted February 6, 2017 I don't agree that the base case for Apple is a 50% drop in iPhone sales over the next 5 years. But, I always like to check the author's model to see if it is consistent with the author's scenario. In this case, Bluegrass is assuming that over the next 5 years: - iPhone revenue drops in 1/2 - Services revenue is stable - "other" revenue (Apple TV, Watch, etc) drops in half BUT, R&D spending goes from 3% of revenue to 18% of revenue. AND Apple spends $125B on R&D and generates ZERO revenue from this. I don't think this scenario is plausible. If you assume that Apple's R&D is completely broken and useless, then they would scale it down with revenue. Let's assume R&D is 5% of revenue (even though this is significantly higher than historical). Under this assumption, Apple would have $347+83=$430B in cash. Terminal value (at 7x proforma) is $201B. So liquidating value is more like: 430*.9 +201 = $588 Given current market values and interest rates, a cost of equity of 8% is more reasonable. And the author seems to ignore dividends. So let's use a discount rate of 8%-1.8%(div)=6.2%. So, using more realistic assumptions, the downside under his liquidation scenario is $83. Which, given the 52 week low is $89, is pretty realistic. But not a very compelling short. Aren't you double counting the divdends in both the $430b cash pile and the 6.2% discount rate? Link to comment Share on other sites More sharing options...
KCLarkin Posted February 6, 2017 Share Posted February 6, 2017 Aren't you double counting the divdends in both the $430b cash pile and the 6.2% discount rate? The author does not mention discontinuing the dividend. But without a cash flow model, it is impossible to know for sure. Link to comment Share on other sites More sharing options...
fareastwarriors Posted February 13, 2017 Share Posted February 13, 2017 Aswath Damodaran on his Apple update. http://aswathdamodaran.blogspot.ca/2017/02/apple-greatest-cash-machine-in-history.html Link to comment Share on other sites More sharing options...
mbharadwaj Posted February 14, 2017 Share Posted February 14, 2017 Berkshire increases stake by 400% http://www.reuters.com/article/us-investment-funds-buffett-idUSKBN15T2VJ Edit: Wrong link earlier. Sorry! Link to comment Share on other sites More sharing options...
Liberty Posted February 14, 2017 Share Posted February 14, 2017 Berkshire increases stake by 400% http://www.reuters.com/article/us-investment-funds-buffett-idUSKBN15T2VJ Edit: Wrong link earlier. Sorry! Either Ted and Todd got more play money, or Buffett got involved. More likely T & T, though, but will probably find out at some point soon. Link to comment Share on other sites More sharing options...
racemize Posted February 14, 2017 Share Posted February 14, 2017 Buffett said he personally was involved in the airlines and buying a lot of equities this quarter, so I'm thinking it was him this time. Link to comment Share on other sites More sharing options...
Liberty Posted February 14, 2017 Share Posted February 14, 2017 Buffett said he personally was involved in the airlines and buying a lot of equities this quarter, so I'm thinking it was him this time. Could be cooperative. Maybe Buffett was starting to be interested and got comfortable after showing with them. In other words, might be him, but might not have happened without them there.. Link to comment Share on other sites More sharing options...
racemize Posted February 15, 2017 Share Posted February 15, 2017 Buffett said he personally was involved in the airlines and buying a lot of equities this quarter, so I'm thinking it was him this time. Could be cooperative. Maybe Buffett was starting to be interested and got comfortable after showing with them. In other words, might be him, but might not have happened without them there.. Sure, I don't doubt that, I just mean that I think it was likely a Buffett directed purchase. Link to comment Share on other sites More sharing options...
sleepydragon Posted February 15, 2017 Share Posted February 15, 2017 I thought Buffett had said "smart phone is too smart for me". Maybe it's not a Buffett purchase, but a combination of T&T, and they now manage more capital? Link to comment Share on other sites More sharing options...
racemize Posted February 15, 2017 Share Posted February 15, 2017 http://www.cnbc.com/2017/01/31/warren-buffett-purchased-12-billion-of-stock-since-trump-election-victory.html Find the $12 billion he bought without apple. Link to comment Share on other sites More sharing options...
Liberty Posted February 15, 2017 Share Posted February 15, 2017 I thought Buffett had said "smart phone is too smart for me". Maybe it's not a Buffett purchase, but a combination of T&T, and they now manage more capital? Buffett is flexible, and he's a learning machine. Maybe it's not him, but it's not because at one point he said something that the situation can't change. Look at airline purchases. Link to comment Share on other sites More sharing options...
NeverLoseMoney Posted February 15, 2017 Share Posted February 15, 2017 "Berkshire Bought Apple Stock, But Warren Buffett Didn’t": http://blogs.wsj.com/moneybeat/2016/05/16/berkshire-bought-apple-but-warren-buffett-didnt/ Berkshire revealed an Apple stake worth nearly $1 billion early Monday, as part of Berkshire’s quarterly disclosure of its stock holdings. Mr. Buffett, Berkshire’s chairman and chief executive, confirmed in an email that he was not the one who added the shares to Berkshire’s massive equity portfolio. He did not say which of the two men made the investment, but added that they make their picks without consulting him. Link to comment Share on other sites More sharing options...
vox Posted February 15, 2017 Share Posted February 15, 2017 Charlie Munger confirmed that Apple and the airlines are his and Warren's investments at the Daily Journal annual meeting. Link to comment Share on other sites More sharing options...
CorpRaider Posted February 15, 2017 Share Posted February 15, 2017 ho-ly. AAPL I get, but he's taking the hit on the airlines? Link to comment Share on other sites More sharing options...
SlowAppreciation Posted February 15, 2017 Share Posted February 15, 2017 Charlie Munger confirmed that Apple and the airlines are his and Warren's investments at the Daily Journal annual meeting. Do you have a link to the source? Link to comment Share on other sites More sharing options...
Jurgis Posted February 15, 2017 Share Posted February 15, 2017 Charlie Munger confirmed that Apple and the airlines are his and Warren's investments at the Daily Journal annual meeting. Do you have a link to the source? Hah, I'd assume vox is directly at the DJCO meeting which is happening about now (finished by now perhaps). Link to comment Share on other sites More sharing options...
vox Posted February 15, 2017 Share Posted February 15, 2017 Charlie Munger confirmed that Apple and the airlines are his and Warren's investments at the Daily Journal annual meeting. Do you have a link to the source? http://finance.yahoo.com/news/charlie-munger-explains-why-he-and-buffett-have-changed-their-minds-about-tech-and-airlines-205414738.html Link to comment Share on other sites More sharing options...
SlowAppreciation Posted February 15, 2017 Share Posted February 15, 2017 Charlie Munger confirmed that Apple and the airlines are his and Warren's investments at the Daily Journal annual meeting. Do you have a link to the source? http://finance.yahoo.com/news/charlie-munger-explains-why-he-and-buffett-have-changed-their-minds-about-tech-and-airlines-205414738.html Thank you Link to comment Share on other sites More sharing options...
sleepydragon Posted February 15, 2017 Share Posted February 15, 2017 This might be silly question: Would it possible that Apple does a stock buy back from Berkshire, using its cash from aboard. Doing so will avoid paying tax, and berkshire can spend the cash in overseas purchases? Link to comment Share on other sites More sharing options...
Jurgis Posted February 15, 2017 Share Posted February 15, 2017 This might be silly question: Would it possible that Apple does a stock buy back from Berkshire, using its cash from aboard. Doing so will avoid paying tax, and berkshire can spend the cash in overseas purchases? AFAIK you cannot do stock buyback from cash from abroad without triggering US taxation. It doesn't matter whether you buy on market or from your friend in Zimbabwe. Link to comment Share on other sites More sharing options...
ScottHall Posted February 15, 2017 Share Posted February 15, 2017 They could do a cash rich split off though, if they have some non-core business units to throw in. Link to comment Share on other sites More sharing options...
CorpRaider Posted February 16, 2017 Share Posted February 16, 2017 Hey man, WTF did Charles T. mean about how hard investing has become for them now. Was he talking about because they've got too much $$$ to invest or because of indexing or because of the vast armies of hedgies or the advent of the Bloomberg or what? Did anyone ask him? Link to comment Share on other sites More sharing options...
mbharadwaj Posted February 16, 2017 Share Posted February 16, 2017 Mr Pabrai tweeted a link out to the entire Munger speech at the Daily Journal meeting!! Link to comment Share on other sites More sharing options...
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