AAPL is getting kicked in the junk again. It’ll be very interesting to compare 13Fs this quarter to last quarter. Lots of HF selling methinks.
Yeah, we’ve been short since the day it crossed $700. Not my call so I can’t take credit. I went to a dinner group a few weeks ago with some of the smartest HF managers in SF and everyone was short or at least claimed to be. It seems like the stock might have a hard time breaking through $500 though.
I might have to go long if it gets into the 400s.
Yeah if it breaks through $500 and hits a technical support level somewhere (arbtrarily, $450 as a round number) I would probably buy some as well, breaking my own rule of hating all things AAPL including the stock. I want to see fatigue from sellers though first. Usually these things deflate longer than you expect, and if people are just starting to cut estimates, they could easily cut again (the trend is usually to under estimate cuts on the first pass).
http://www.valuewalk.com/2012/12/apple-inc-aapl-revenue-and-eps-targets-cut-by-jeffries/
This was a great second derivative of the products short. There’s no reason to upgrade to the iPhone 5. Let’s see the stock in the $400s. I revise my statement above – if they’re cutting estimates, this is almost certainly going to break $500.
There is no reason to upgrade to the iPhone 5 if you’re a 4S user, but if you have previous models, then you’re the target audience. I don’t think Apple expects people to get a new iPhone literally every year.
I"m pretty bullish on Apple over the long term, but am happy to wait for the price to become far more depressed.
Apple TV could be really, really fucking cool. And, although it wont be as cool as Google TV, there may be enough fanboys and visual pazaz to owning the Apple TV, that it could give apple more than just a lifeline.
Just a thought, from the guy who called apple Long the second the aired the “im an apple”, “im a mac” commericals.
bromion - have you ever looked at Boston Beer Co (SAM)? It seems to me that it is a good company, and a moderate grower with a niche, but can’t really seem to justify the way the price has been moving over the past 2 years…simply a stock catching a lot of momentum?
Never looked at SAM or any other domestic beer company. I’ve looked at several international beer companies in the past and it’s definitely a great business. Their beer is good (IMO) but how will the earnings keep growing?
It is surprising that a beverage company stock has tripled in two years. The only reason I could guess is that they are expanding distribution and gaining market share.
If you want to see some really goofy price action of a beverage company, check out JSDA circa 2007.
Just glanced at SAM for 15 minutes:
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Public 1995, sales up ~5x. earnings up ~6.5x since then
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Sells at 28x EPS, 3x sales, 7.5x TBV, 5.3x market cap / GP $; ~1.8B market cap
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35% short interest
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1% market share of the domestic beer industry
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Capex spending way up last 3Q, is that going to accelerate EPS? Capex was way up '07-08 and then EPS tripled. Are they expanding capacity to meet demand?
The questions for me would be:
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What is SAM’s maximum potential volume penetration?
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At what point do the large beer companies introduce competitive craft beers and take share / cap growth for SAM? This may already be happening.
You’re paying for a lot of growth here. If it doesn’t continue to grow very rapidly, this stock is going to have an ugly gap down. SAM has already exceeded a lot of expectations in growth so maybe there is continued runway. I don’t know but you could probably figure this out if you wanted to do some really intensive channel work. It seems that a lot of the growth recently has come from non-beer products with slowing beer growth – so if the non-beer products hit the wall as well, this stock is going down.
It’s impossible for SAM to run the tables in beer over time – at some point the growth will slow / stop and the multiple will contract. Whether that’s one quarter or five years from now, I don’t know. When it does happen, this is either a buyout (estimable within a range of value) or an incredible short.
The recent price action is probably short covering on increased guidance.
^ Awesome, appreciate the info. Pretty much agree with your assessment.
Good beer though.
I like the beer too.
I was just looking at the proxy – CEO-founder owns 35% and is 62. At some price (whatever price that is), SAM has “pick up the phone value” to a strategic, so you know they’re not going to let the equity erode too much. If growth slowed and you were short, you would need to have an educated guess at what a strategic would pay for this company to avoid getting burned. The price might be higher than you would expect given distribution costs – SAM would be massively accretive to someone that already has a distribution network, and it’s probably easier for someone to buy craft beer know-how than to try to replicate it.
Neither of the other two founders are listed as 5% holders. File that under “things that make you say ‘fail’”
Strategic is *very* unlikely. These craft guys basically hate the macro brewers, and while it cannot be ruled out (Goose Island sold to ABInbev), Sam Adams is the granddaddy of the craft brewers and would largely lose respect within the community Mr Koch has spent his life building. It would be like Steve Jobs selling Apple to MSFT in the 90s.
You’re probably right, but consider that he owns >$600 million of stock at the current valuation and owns all of the B class voting power. It’s incredible that an upstart beer company has been able to take 1% of the market, but that won’t continue forever. InBev will either build or buy to fight back, they’re not going to continue to lose share.
At the end of the day, beer is a branded distribution and shelf space business. There’s no reason one of the big dawgs can’t sell similar craft beers through the channel they already dominate (or perhaps they already are). Sam Adams would be very smart to take the money and run at some point, and if the value of his stake falls significantly, he might be open to that.
I understand your point too – he’s a 6th generation brewer, he built the company with his own hands, he hates MSFT (err… wait, no, but who doesn’t hate MSFT for good measure anyway?).
All I’m saying is, the valuation is very high and growth won’t continue forever, so when the multiple does contract, the biggest risk to shorts is a sale of the company and in my experience you can never really know if or when that will happen regardless of the “story” around the founder. I’d rather go off of the numbers – what would InBev buy this at? If the stock is at that level or lower, I don’t want to be short anymore.
^ True, fair point.
Hmm…$464 after hours. Financials weren’t actually that bad. Although 17% YoY revenue growth and 0% EPS growth is a little troubling. But then we have $167B in cash and free cash flow up over 30% YoY. Plus sales in every geographic region increased nicely.
Einhorn’s doubled down but Gundlach says to wait until $425. Those are pretty much the only two people I even remotely listen to so they’re no help.
My patience is paying off so far but now I’m getting an itchy trigger finger. I’ll see what tomorrow brings but I’m thinking a limit order at $450 has a nice ring to it.
I think a couple of things have come to light:
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Apple can sell a shitton of iPhones, but it’s getting harder to charge a premium over competing products. In other words, their innovation edge might be eroding.
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Profits in China might not be as high as people have initially predicted. The reason being that there is basically no intellectual property right enforcement in China. Chinese companies can blatantly copy Apple products and sell them for 1/5 the cost. So, Apple will need to dramatically reduce the price of their products.
They are still a strong company, but people are backing away from all that “$1 trillion market cap” talk and whatnot.
($457 now, btw)
Me No Catch Falling Knife. All the $600-700+ bagholders have already sold months ago I think, but the $500+ buyers are going to hit the fan hard tomorrow. And that was the biggest inflection point in the stock in the past 5 years.
I picked up a few shares this morning. Very tiny position. Probably will add to it over the next week or so.
I always wondered if the growth magic might disappear after Steve Jobs died. The temptation to slide into corporate incrementalism rather than maintain the “insanely great” mantra (and vision to support it) was likely to be too tempting. The market (both product and financial) seems to have given Apple about a year to prove itself.
I guess Apple will continue to be a decent company, but it really needs to introduce something to prove it can dazzle the way the iPod dazzled, the way the iPhone dazzled, even the iMac.
I was long rim at $6.90…I still think that company should easily be worth $22 a share. Plus there is some chatter of Lenovo bein interested in them. I put on a AAPL position at $509…might have been a mistake. A very unsophisticated DCF model I have with a discount rate of 15%, terminal growth rate of 2.5% and ratcheted down growth from 15% to 2.5% over the next 8 years says the company is worth $565…I don’t know if a 25% return is enticing enough…may have to sell.