A couple of years ago Steve was CEO. Doubt he would be chatting with Icahn either. Take heart.
Got a tip for us?
Let us know
Become a MacRumors Supporter for $50/year with no ads, ability to filter front page stories, and private forums.
Hedge Funder Lee Cooperman Takes 'Modest Position' in Apple, Drives Stock Price Over $500
- Thread starter MacRumors
- Start date
- Sort by reaction score
A couple of years ago Steve was CEO. Doubt he would be chatting with Icahn either. Take heart.
You also don't need to know anything about stocks. If you just put a few hundred bucks every month into an unmanged S&P 500 fund when you are 30, you will be very well off by the time you retire. I guess hitting it big in the lottery is a more fashionable plan.
Yeah, I sold it at $460 (wish I'd sold it at $700... sigh...) and bought it back at $415.
Still not certain what to do with it in the months to come..
Still not certain what to do with it in the months to come..
As much as I feel Apple was undervalued (picked up more shares recently at 400ish level) Whales like Carl,shouldn't be able to move markets like this!
Hold on to it, for now!
And then repeat. You've got the idea. I don't know how, or even if, this could be made illegal, but it's a highly shady way to make millions, while leaving many ordinary investors in the dust.
That's because stock doesn't represent the current performance (that's what earnings reports are for) but the expectations of the stockholders for the future. That's why for example the stock of Tesla has risen steadily the last years without barely making any profit.
Not contributing anything to the planet? Being some kind of tree slug and getting extremely wealthy from it? Oh, but sorry. To most business peeps, there are no morals in the use of money.
I must be an uninformed claptrap too, but I'm suspicious of anything Icahn does. I'd call any move he makes either a way to get power or stock manipulation. I doubt I am the only one who believes this given his history.
Now the big investors are in there will be a lot of positive news or at least positive spin on news and the price is going to go up reasonably quickly then they will dump the price will go down again with a lot of negative spin to push the price down ready for them to buy again. The whole system is organised to pump money out of the small investors pocket into the large investors pocket. These guys see the small investors as rubes only there to fuel their schemes, think back to the near hysteria that got Apple to $700+.
These days?
That's pretty much been the entire purpose of the stock market since it's existence.
Probably one of the people who drove down the stock price in the first place too.
You are right. People just needed to save and take investment with a long view.
Trashing Wall Street doesn't do anything.
The stock markets are inherently amoral places. What else you may be saying about that, I have no idea. I have a feeling you don't either.
Icahn is in it for the money. Does anyone invest in the stock market for any other reason? Yes, he does like to stir the pot, but even with his $1b purchase, he will own perhaps 0.25% of Apple's common stock. This level of holding might get his calls to Tim Cook returned, but that's about the extent of his power. He isn't getting on the board unless he can orchestrate some sort of revolt by large institutional investors, but I doubt he can go that far either. I suspect they are also wary of Icahn.
In the meantime, the impact of his interest and the interest of other large professional investors in AAPL has helped change the narrative for the stock. This is good for everyone who invests in AAPL. So while I'd watch Icahn out of the corner of my eye, I would not obsess about his motives. In the end, they are the same as this AAPL investor -- to make money.
----------
It's quite emotionally satisfying, apparently. I don't want to be a cynic but it seems to me that at least some of the Wall Street bashing comes from people who are unfamiliar with the concept of saving and investing and are trying to rationalize their lack of planning for the future.
I just now noticed this comment. It's not quite accurate. If by "diversified" you mean "perfectly representative of both all systematic and all idiosyncratic risk in the market," then sure. But that's a fairly narrow definition that most people don't actually employ when talking about diversification.
You can, however, create a well-diversified portfolio that reflects the lion's share of the systematic risk and beats the market (via superior stock selection, or reduction of idiosyncratic risk). Similarly, you can construct portfolios that hedge out some of that systematic risk and (again via superior stock selection) beat the market on a risk-adjusted basis.
I think you give icahn too much credit. People go into the stock market for greed (Which btw, looking after yourself isn't inherently amoral, having a lack of humanity is), but icahn takes it quite a bit further. I have no doubt that he hopes to gain power somehow, and/or sometime in the future with this move.
I didn't spot this or I would have responded too. I think it is demonstrably not true, but for a different set of reasons. Longterm investing is exposed to the significant effects of sector rotation. Knowing ahead of time what sectors are going to outperform the market is essentially a guessing game that nobody is good at consistently. The best way to beat the market averages over time (and over time is what really matters) is to invest in a broad spectrum of unmanaged index funds. This strategy doesn't have the emotional appeal of picking stocks, but it provides you with the best chances at a superior return on investment over time. Unmanaged is also important as mutual funds are run by managers who picks stocks and charge you handsomely for their very limited wisdom.
I don't give him any credit. (You might say I'd make him pay cash.)
As I pointed out, a 0.25% holding is not a path to power. The only way he obtains leverage out of that is to become the ringleader for institutional investors, but I don't see that happening either. I think the institutional investors are mainly satisfied by Apple's efforts to distribute cash and aren't going to go looking for some Robin Hood to get them more. All of this of course is predicated on Apple being run well. If Tim Cook and team fouls up royally, then they are going to have more than just Carl Icahn to worry about.
Agreed. I was generalizing. But if you want to sell yourself as a stock picker, you need to pick some stocks. And the more numerous your picks the closer you to come to just getting market level returns. Also the less it looks like you have some special insight based on your research into a company, industry or market forces. It is one thing to tell clients that you've picked 20 different companies based on what you see as great opportunities. That is very believable. But it is another thing to say you selected only "the best" 1,000.
20 companies assuming you don't clump in an industry will basically get to a point where you are diversified. And you could still take a large position in one. And as you say if you pick a bunch of winners, you could beat the market. But most of the evidence is that very few people can actually do that for any really significant period of time.
I think the market beating insight that some folks might get from time to time is rare. When you get it, if you are sure you've got it, then you have to go in hard and ride that. It might be years before you have another great insight.
For most investors, I agree with you. That said, there are some (few) managers who are good at identifying sectors. Within the hedge fund space, that's certainly one style that certain select managers have executed well over the past 15-20 years, and if you look at the monthly returns, they end up statistically significantly different from their benchmarks.
Of course, most of those managers either don't want additional AUM (which is harder to generate alpha due to liquidity) and/or only want high net worth or institutional clients, so they're out of reach for most investors. And therefore they go chasing the returns of the guy who's outperformed over the 3 or 5 year period, hoping and praying it's skill and not dumb luck or, worse, a fund primed for mean reversion.
I run a quant strategy with my own money (not HFT) that implicitly makes sector and industry bets when identifying undervalued securities. The alpha generation, both in reality and in backtesting, has been quite good, both on an absolute and risk adjusted basis. But it's not the sort of thing the average investor has any business doing, and even I prefer to use short positions to negate some of the risks of those bets (even if it shrinks the returns). If I want more risk, I prefer leverage to systematic risk over which I have no control.
Satisfied is probably the right way to put it. I doubt investors in general are really happy. If, and this is likely, the $100 billion cash return program is too small to put even a dent in the cash pile, then Shareholders are going to have viewed this as a missed opportunity. Of course everyone will love being shareholders in that scenario. But it will be recognized that things could have been even better.
Remember, Apple is heading toward the "money" part of the year. The iPhone releases are coming. It looks like they are gearing up for a huge growth in China sales. iPad updates are coming. iOS 7 app purchases are coming (yes you are going to have to repurchase some apps). And so is the long awaited, albeit niche Mac Pro. Presumably another tidalwave of cash is coming in between the end of September and December 25. I think that is what Icahn is talking about. He is saying Cook, you know this is coming. Why didn't you take out more stock in the low $400s?
I do something similar although I definitely have net long exposure. Been thinking about adding some short components to the strategies but still working on that. The vast majority of investors should be investing in passive indexes at regular intervals and just letting it ride.
The strategy you are suggesting requires not only a lot of knowledge, but no small amount of luck and money. It is also the kind of investing approach that makes novice's eyes glaze over and leads them to believe that Wall Street is a casino where some are playing with a marked deck. So they stay away in droves and are poorer for it.
Diversified, unmanaged index funds is the right approach for the vast majority of investors. Dial in your tolerance for risk, push the cruise button, and forget. Wealth by the drip plan. It took me a long time to figure this out myself. I wish I'd known sooner.
----------
By design the dividend won't make a dent because Apple isn't going to repatriate their overseas cash unless they get a tax holiday. Not to debate whether they should get one or not, it's just a fact that the dollars will remain in overseas accounts if they don't. And of course, that comes down more to politics than management.
Is Apple even allowed to disclose their repurchases? I know some general statement is made in the filings but I don't see where anyone, Icahn included, could claim with authority that management missed any opportunities.
*Knowledge, definitely.
*Luck, less so. There are many clear quant signals that have persisted since the 1940s. Core principles like "value" and "momentum", when executed well (and in tandemthey work better together than in isolation, as doing so helps avoid value traps and over-hyped alleged growth stocks), can beat the market. The beauty of quant systems is they help investors avoid the psychological pitfalls that often translate into money-losing behavior. There's variance, sure, but I wouldn't call that pure luck.
*Money, I'd argue, cuts both ways and can actually be something of a liability. One of the reasons asset managers often struggle is that with substantial assets under management, the pool of investable companies is dramatically smaller for liquidity reasons. A savvy small (i.e., <$5M) investor can move nimbly into and out of some of these positions without major slippage. Where more money helps is in being able to afford risk control tools, since the good ones tend to start at $100K/year or so.