Three reasons to sell Apple

By Deputy editor Tim Bennett Oct 26, 2012

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  1. Impromptu

  (27 October 2012, 09:17PM)  Complain about this comment

  Thank you for this. I haven't liked Apple's numbers for a while, but if you'll forgive me, I'll go off-numbers here.
  
  I've been joking for ages, re the patents firestorm, that it'll only be a matter of time before Apple starts trying to stake some claim on the concept of the opposible thumb (after all, they've tried it with basic geometric shapes and the idea of touching things).
  
  I never dreamed that offhand sarcastic (and often rather filthy) satire of a company would be adopted by that company as marketing policy. Hubris is always blind.
  
  I love the anecdote (perhaps apocryphal) about Jobs flying into a rage at MS for stealing the concept of a graphical interface. Gates' alleged reply was along the lines of: we crept into Xerox's house to steal something, only to find you'd got there first.
  
  It's so thin, so light, so beautiful to hold in your hand... rapturous applause. The product launches resemble a cult rally. Shudder.

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  2. Colin Selig-Smith

  (28 October 2012, 08:21PM)  Complain about this comment

  Love the video. Particularly since you confirm my own biases. I'm relatively sure that Apple bubble earnings popped with release of the iPhone 5. When I look at the product, compare it to the previous one, the iPhone 4 and.... It's the same. Why would any but the most ardent customer bother to upgrade? In fact it seems to be plagued with problems the iPhone 4 doesn't have.
  
  So... Growth? There is a superb video by a physics professor called Alfred Bartlett on growth. His premise is that human beings don't understand the exponential function. I believe Apple have hit their limits of growth. Which could be considered a problem for a growth stock.

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  3. L R

  (29 October 2012, 07:19AM)  Complain about this comment

  The video is very nice and well put together, however, there is a major flaw in the arguments put forward by Tim.
  If you exclude the Good and the Ugly points which Tim argues are not representative of the value and focus only on the Bad.
  
  His argument is that because all 3 of the ratio's are trending down that the market doesn't like it.
  
  The counter argument is "Well Great" the price or value of the stock is moving into the right territory to make it a strong buy. Precisely that the ratio has fallen from a 23 at the high point to closer to 14 now is an illustration of value.
  
  Yes investment is hard and we'd all be rich if it was easy, but the method used here is no guarantee.
  
  Personally I'm in awe of Apple's success but am not a fan of investing in it, but not for the reasons put forward in this video.

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  4. Beta adjusted

  (31 October 2012, 03:16PM)  Complain about this comment

  Stock already down almost 20% from its recent peak though ... is it still a sell? look forward to hearing your thoughts on share buybacks. In my experience, share buybacks can be a wonderful thing ... just look at tobacco stocks: with divi yield you are getting a ~4 - 4.5% return but factor in share buybacks and its more like 7 - 8%. My own backtests show that high share buyback companies outperform low share buyback companies. But of course they can be used to manipulate eps for executive comp programs ... but that is not always the case!

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  5. Tim

  (01 November 2012, 08:30AM)  Complain about this comment

  Beta adjusted - on the whole I don't much like share buybacks but I would be interested to see any research that suggests I should. Feel free to send anything you have to editor@moneyweek.com. Tim.

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  6. Beta adjusted

  (01 November 2012, 01:35PM)  Complain about this comment

  Will do in next few days Tim. This discussion agrees with you: http://online.wsj.com/article/SB10001424052970203824904577213891035614390.html
  
  So in aggregate, academic research shows convincingly that your stance is correct. Interesting.
  
  But I definitely think that it depends on the company and the valuation. If a good company buys back its stock when they are cheap, its accretive to shareholder value. e.g. if a company is actually worth 10p but the company buys its shares back at e.g. 5p, then there is an immediate uplift. This does happen ... tobacco is a good sector example as most would agree that its still cheap. The same may not be true of e.g. utilities.

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  7. Impromptu

  (01 November 2012, 08:52PM)  Complain about this comment

  I too would like the issue of share buybacks get a good Bennetting.
  
  I know it's a thorny debate, but is there something to be said for the view that, since a company's shares represent a form of currency, buyback programmes are a sort of private version of QE?
  
  In general, though, the main flaw with buyback programmes is that companies are in the main no better at market timing than any other investors. Actually, they can't afford to be seen as great at buying their own stock, for regulatory reasons.
  
  Your next mission, Tim, should you choose to accept it...

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  8. Tim Bennett

  (02 November 2012, 08:35AM)  Complain about this comment

  Impromptu - see this week's issue of the magazine. Your wish may have been granted on page 10....Tim.

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