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Warren Buffett says Apple should buy back stock & build value, ignore Einhorn

post #1 of 58
Thread Starter 
Berkshire Hathaway chief and respected investor Warren Buffet believes Apple should use its cash pile to buy back more stock while it's at a depressed value, comparing it to buying dollar bills for 80 cents.

Buffett


Apple Chief Executive Tim Cook should work on building his company's value, rather than worrying about pushing the stock price up on a daily basis, Buffett said in an appearance on CNBC's "Squawk Box" on Monday, as summarized by Apple 2.0. Buffett commented on Apple as part of a three-hour appearance on the program.

The Berkshire CEO admitted that he talked with late Apple co-founder Steve Jobs about what Apple could do with its cash. He believes the best use of Apple's $137-billion-and-growing cash pile is to buy back stock at a reduced price.

"If you could buy dollar bills for 80 cents, it's a very good thing to do," Buffett said.

Beyond that, he believes Apple's best strategy is to simply run its business well. If Cook can continue to do that, Buffett believes shares of AAPL will respond accordingly.

As for hedge fund manager David Einhorn's push for Apple to offer "iPref" preferred shares, Buffett believes the best thing for Cook and Apple to do is ignore it. He noted that his own Berkshire has lost 50 percent of its stock price four times in its history.

"When that happens, if you've got money, you buy it," he said. "You just keep working on building the value."

And while he admitted Apple may have "too much" cash, he said one reason for that could be the fact that Apple has not yet been taxed on two-thirds of it, which is kept overseas.

While Buffett doesn't own shares of Apple, he has been positive on the company's outlook for some time. In an interview back in 2010, Buffett said he believed Jobs had done a "terrific job" at the helm of Apple.

Apple and Berkshire Hathaway also shared the spotlight last week, when both companies appeared in the top 10 on Fortune's "Most Admired" list of companies. Apple took the top spot on the annual list, while Berskhire came in 8th.
post #2 of 58
Well whatever Apple do I just hope, sooner rather than later, we see AAPL start going up again ... please ... pretty please!
Been using Apple since Apple ][ - Long on AAPL so biased
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Been using Apple since Apple ][ - Long on AAPL so biased
nMac Pro 6 Core, MacBookPro i7, MacBookPro i5, iPhones 5 and 5s, iPad Air, 2013 Mac mini, SE30, IIFx, Towers; G4 & G3.
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post #3 of 58
My hero 1biggrin.gif

Social Capitalist, dreamer and wise enough to know I'm never going to grow up anyway... so not trying anymore.

 

http://m.ign.com/articles/2014/07/16/7-high-school-girls-are-kickstarting-their-awa...

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Social Capitalist, dreamer and wise enough to know I'm never going to grow up anyway... so not trying anymore.

 

http://m.ign.com/articles/2014/07/16/7-high-school-girls-are-kickstarting-their-awa...

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post #4 of 58
Duh. No-brainer.

Some of us have been saying this for a while.
post #5 of 58
Quote:
Originally Posted by anantksundaram View Post

Duh. No-brainer.

Some of us have been saying this for a while.


The point is, if YOU say it, nobody cares*. If HE says it, Einhorn can go f... himself.

 

 

*Not said in an unfriendly way, just from a standard stockholder perspective, you're nobody to them, he is a God of Stock.

Social Capitalist, dreamer and wise enough to know I'm never going to grow up anyway... so not trying anymore.

 

http://m.ign.com/articles/2014/07/16/7-high-school-girls-are-kickstarting-their-awa...

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Social Capitalist, dreamer and wise enough to know I'm never going to grow up anyway... so not trying anymore.

 

http://m.ign.com/articles/2014/07/16/7-high-school-girls-are-kickstarting-their-awa...

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post #6 of 58
About time some common sense, but Wall Street will not listen to someone who knows how to make money the old fashion way, which is to work hard at it over a long time and invest in things that create value.
post #7 of 58
Quote:
Originally Posted by anantksundaram View Post

Duh. No-brainer.

Some of us have been saying this for a while.

I'd prefer this over some of the silly stuff we hear like Apple should buy Twitter, Netflix or Tesla.

post #8 of 58
Anyway you look at it Apple is like a rollercoaster...with screams, yells, ups and downs...in a good way.
post #9 of 58
That's an analyst I respect.

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post #10 of 58

I don't get where all of this advice for Apple is coming from. Apple never listens to analysts.

post #11 of 58
US Banks have been buying dollar bills for $.97 for years. The CEOs think they are so smart they give themselves huge bonuses.
post #12 of 58
Quote:
Originally Posted by digitalclips View Post

Well whatever Apple do I just hope, sooner rather than later, we see AAPL start going up again ... please ... pretty please!

 

The real trouble isn't what Apple is or isn't doing. It's the analysts etc. they are the ones spreading reports like Apple cut orders on screens for iPads which just mean they aren't selling well. When the truth could be that they are selling like crazy but Apple was having to buy twice as many screens to make sure they had enough of their quality standard to fill the orders and now the supplier has their game together and this isn't an issue anymore so why buy tons of surplus.

 

Analysts are also the ones saying Apple will release this or that and when it turns out to be wrong they scream delay so they can still look like they knew what they were talking about when they didn't. Or way over inflating what they think sales of something will be and screaming failure their crazy numbers aren't met.

 

until these games are forced to an end, what Apple does won't be the key to their stock value 

A non tech's thoughts on Apple stuff 

(She's family so I'm a little biased)

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A non tech's thoughts on Apple stuff 

(She's family so I'm a little biased)

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post #13 of 58
Quote:
Originally Posted by charlituna View Post

The real trouble isn't what Apple is or isn't doing. It's the analysts etc. they are the ones spreading reports like Apple cut orders on screens for iPads which just mean they aren't selling well. When the truth could be that they are selling like crazy but Apple was having to buy twice as many screens to make sure they had enough of their quality standard to fill the orders and now the supplier has their game together and this isn't an issue anymore so why buy tons of surplus.

Analysts are also the ones saying Apple will release this or that and when it turns out to be wrong they scream delay so they can still look like they knew what they were talking about when they didn't. Or way over inflating what they think sales of something will be and screaming failure their crazy numbers aren't met.

until these games are forced to an end, what Apple does won't be the key to their stock value 

Agreed.
Been using Apple since Apple ][ - Long on AAPL so biased
nMac Pro 6 Core, MacBookPro i7, MacBookPro i5, iPhones 5 and 5s, iPad Air, 2013 Mac mini, SE30, IIFx, Towers; G4 & G3.
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Been using Apple since Apple ][ - Long on AAPL so biased
nMac Pro 6 Core, MacBookPro i7, MacBookPro i5, iPhones 5 and 5s, iPad Air, 2013 Mac mini, SE30, IIFx, Towers; G4 & G3.
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post #14 of 58

And the stock is down another $6 so far today. I don't get what's causing these 1-2% drops seemingly every day.  At what point does it get low enough where it becomes a steal and people start buying again? 

post #15 of 58
Finally a voice of sanity.
post #16 of 58
Quote:
Originally Posted by bdkennedy1 View Post

I don't get where all of this advice for Apple is coming from. Apple never listens to analysts.

 

True. While the phrasing was advice to Apple, I think the real intended audience were investors. Buffet is smart enough to know that Apple is likely to do as he said and was likely always going to. But the common investor isn't necessarily going to see that. They generally do trust Buffet cause he's basically an investment god. So he says it and that its a good thing, they will trust that Apple will listen and so should they. 

 

With someone like Buffet backing up the company hopefully the bled off of value will slow, if not stop sooner rather than later.

A non tech's thoughts on Apple stuff 

(She's family so I'm a little biased)

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A non tech's thoughts on Apple stuff 

(She's family so I'm a little biased)

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post #17 of 58

Warren Buffet is consistently a voice of logic and reason.  From investing in general, to taxes, to Apple, he is right on about what needs to be done.

 

As Buffet said, Apple stock is a great value and buying their stock is a great opportunity for any person or entity that has a surplus of cash with a long investment time horizon including the company itself.

 

The market can stay irrational for long periods of time, but those who stand firm through them often reap the best rewards.

post #18 of 58
Quote:
Originally Posted by charlituna View Post

 

The real trouble isn't what Apple is or isn't doing. It's the analysts etc. they are the ones spreading reports like Apple cut orders on screens for iPads which just mean they aren't selling well. When the truth could be that they are selling like crazy but Apple was having to buy twice as many screens to make sure they had enough of their quality standard to fill the orders and now the supplier has their game together and this isn't an issue anymore so why buy tons of surplus.

 

Analysts are also the ones saying Apple will release this or that and when it turns out to be wrong they scream delay so they can still look like they knew what they were talking about when they didn't. Or way over inflating what they think sales of something will be and screaming failure their crazy numbers aren't met.

 

until these games are forced to an end, what Apple does won't be the key to their stock value 

 

 

It is more sinister than that. It is hedge fund managers leaking faulty rumors to sink the stock. 

post #19 of 58

wouldn't that be nuts?? Apple stops releasing products so the stock tanks due to "lack of innovation". once their market cap sinks below 200 billion, they buy all the shares with their cash hoard, go private, and release all the products they've been keeping from us.

 

/conspiracy

post #20 of 58

It was about this time of year last year when Cook dumped all his shares.  I believe he and other executives are being granted more huge allotments this year and in 2015.  Curious to see if they hold at this price or sell.

 

Share buybacks really favor sellers of the stock.  For people holding the stock a dividend increase would be much better and would go much further in demonstrating long term confidence in the company.

 

Bottom line if you believe in the company long term this is a nice chance to add shares at close to a 40% discount from the high (wow, that is a big drop), and if not what does it matter what they do?

post #21 of 58
Yes.
post #22 of 58
Quote:
Originally Posted by tkell31 View Post

Bottom line if you believe in the company long term this is a nice chance to add shares at close to a 40% discount from the high (wow, that is a big drop), and if not what does it matter what they do?

 

I believe in Apple, I always have, but I'm not exactly rushing to pick up any shares at the moment. Who knows where the bottom is? Valuation means nothing apparently, so nothing would surprise me. I wouldn't even be surprised if it dips below 400.

post #23 of 58
Quote:
Originally Posted by digitalclips View Post

Well whatever Apple do I just hope, sooner rather than later, we see AAPL start going up again ... please ... pretty please!

 

The drop in stock price is just fodder for the trolls. What if the stock drops to $300 or even $200? Does this put Apple out of business? Does this change the fact that Apple sells every single thing it manufactures? Does it affect sales or profits? No, all it means is the manipulators have found a new way to make money on AAPL. Even the nay-sayers wonder out loud why the stock has taken a beating in light of the reality of Apple's massive revenue and profit.This "Apple is doomed" crap is a figment of the iHater's imaginations and we enthusiasts should not take the bait.

 

What really scares me is that Tim Cook and the leadership might succumb to the Wall Street drum beat of "sell more for less to survive." They might head for the quick fix philosophy of sacrificing margins and quality for market share growth. I personally want Apple products to remain special, unique, valuable, and top quality. I'm perfectly willing to pay the price. People who are used to the beige box, bottom of barrel cheap stuff can keep on buying their Dells, HPs, Samsung.

 

If Apple ever becomes just another player in the game THAT's when they are doomed. Thats when I start considering other options.

post #24 of 58
Quote:
Originally Posted by Crowley View Post

That's an analyst I respect.

Buffett isn't an analyst. He doesn't make money by offering pundit advice to others. Rather, he invests his own money - and has grown his cash into one of the largest holdings on the planet. His success in investing is unquestionable. When he's right, he makes money. When he's wrong, he loses money. The fact that his wealth has grown so rapidly indicates that he's right far more often than he's wrong.

Analysts, OTOH, simply spew words - and then are never held accountable when they're wrong.
Quote:
Originally Posted by Rogifan View Post

And the stock is down another $6 so far today. I don't get what's causing these 1-2% drops seemingly every day.  At what point does it get low enough where it becomes a steal and people start buying again? 

I would have thought we passed that point a long time ago, but obviously not. Apple's forward, cash adjusted P/E is 6-7 right now. The Wall Street average is over twice that. By ANY rational standard, Apple is far, far, far below where it should be. Even if you assume that it won't grow any faster than the Wall Street average, it should be trading at 16 times earnings (actually, more because of the 2.5% dividend yield).
"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
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"I'm way over my head when it comes to technical issues like this"
Gatorguy 5/31/13
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post #25 of 58

How low does AAPL have to go before management does something to stop the bleeding??? This is infuriating to say the least!

 

They should be buying back shares, raising the dividend, and possibly splitting the stock. Of course, their future products need a WOW factor. 

 

My patience is running out!

post #26 of 58
Quote:
Originally Posted by Rogifan View Post

And the stock is down another $6 so far today. I don't get what's causing these 1-2% drops seemingly every day.  At what point does it get low enough where it becomes a steal and people start buying again? 

It will be low enough when Apple begins buying back shares. Then these analysts will then harp that its time to buy.
post #27 of 58
Quote:
Apple Chief Executive Tim Cook should work on building his company's value, rather than worrying about pushing the stock price up on a daily basis, Buffett said in an appearance on CNBC's "Squawk Box" on Monday, as summarized by Apple 2.0. Buffett commented on Apple as part of a three-hour appearance on the program.
 

 

 

Quote:
Beyond that, he believes Apple's best strategy is to simply run its business well. If Cook can continue to do that, Buffett believes shares of AAPL will respond accordingly.

 

First sane thing I've fucking read, as opposed to the rest of the shrieking internet, demanding Apple react irrationally to the stock and do random shit to bring it back up. I'm reassured that the top guys at Apple are cool and mature enough to ignore that noise. 

post #28 of 58
Quote:
Originally Posted by greendisease View Post

How low does AAPL have to go before management does something to stop the bleeding??? This is infuriating to say the least!

 

They should be buying back shares, raising the dividend, and possibly splitting the stock. Of course, their future products need a WOW factor. 

 

My patience is running out!

 

Then sell. Their future products don't need a WOW factor. They can keep on doing what they've been doing.

 

Quote:
Originally Posted by bdkennedy1 View Post

I don't get where all of this advice for Apple is coming from. Apple never listens to analysts.

 

Buffett isn't an analyst. He just offered an opinion. He isn't telling investors to sell/buy/hold.

post #29 of 58
That's the difference between Buffet and Einhorn: one is a long term investor who seeks companies that create real value, the other belongs to the hedge fund mentality who is trying to game the system to make a quick profit.

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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post #30 of 58
Quote:
Originally Posted by greendisease View Post

How low does AAPL have to go before management does something to stop the bleeding??? This is infuriating to say the least!

 

They should be buying back shares, raising the dividend, and possibly splitting the stock. Of course, their future products need a WOW factor. 

 

My patience is running out!

 

You should sell your Apple stock.  There are obviously much better investments for someone as sharp as you.

post #31 of 58
Quote:
Originally Posted by Suddenly Newton View Post

That's the difference between Buffet and Einhorn: one is a long term investor who seeks companies that create real value, the other belongs to the hedge fund mentality who is trying to game the system to make a quick profit.

 

There is one other difference also. Only one of the two actually holds any AAPL. If Buffet is all about valuation and buying into strong companies that create value for the longterm, then why doesn't he own any AAPL? I guess it must not look like a good proposition for him.
post #32 of 58
Quote:
Originally Posted by Rogifan View Post

I'd prefer this over some of the silly stuff we hear like Apple should buy Twitter, Netflix or Tesla.

 

I really wish they would buy Groupon, Yahoo, and the Hello Kitty Corp.

post #33 of 58
Finally a voice of reason regarding Apple's stock price.
post #34 of 58
Quote:
Originally Posted by "Apple 
[" url="/t/156274/warren-buffett-says-apple-should-buy-back-stock-build-value-ignore-einhorn/30#post_2287436"]
There is one other difference also. Only one of the two actually holds any AAPL.If Buffet is all about valuation and buying into strong companies that create value for the longterm, then why doesn't he own any AAPL? I guess it must not look like a good proposition for him.

Do you always deny the antecedent?

"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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"Apple should pull the plug on the iPhone."

John C. Dvorak, 2007
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post #35 of 58
Quote:
Originally Posted by Apple ][ View Post

 

There is one other difference also. Only one of the two actually holds any AAPL.If Buffet is all about valuation and buying into strong companies that create value for the longterm, then why doesn't he own any AAPL? I guess it must not look like a good proposition for him.

Buffet doesn't own AAPL or GOOG or MSFT or IBM because he does not invest any tech businesses.  He states that he only invests when he knows and understands their business.

post #36 of 58
Quote:
Originally Posted by tomjava View Post

Buffet doesn't own AAPL or GOOG or MSFT or IBM because he does not invest any tech businesses.  He states that he only invests when he knows and understands their business.
And he also sailed through the dot-com bust without breaking a sweat.

Buffett and Bill Gates are good friends (bridge partners, even), yet Warren doesn't own any Microsoft stock (that I know of). That should tell you something about his sticking to his investment principles.
post #37 of 58
Quote:
Originally Posted by Dlux View Post


And he also sailed through the dot-com bust without breaking a sweat.

Buffett and Bill Gates are good friends (bridge partners, even), yet Warren doesn't own any Microsoft stock (that I know of). That should tell you something about his sticking to his investment principles.

 

And here is whom Warren learned his investment principles from...  Benjamin Graham.

 

http://www.amazon.com/Intelligent-Investor-Definitive-Investing-Practical/dp/0060555661/ref=la_B000APZXBQ_1_1?ie=UTF8&qid=1362427739&sr=1-1

post #38 of 58

Since the signs point to no new stuff until the summer at earliest I wouldn't be surprised to see the stock below $400 soon.

post #39 of 58
Quote:
Originally Posted by "Apple 
[" url="/t/156274/warren-buffett-says-apple-should-buy-back-stock-build-value-ignore-einhorn/30#post_2287436"]

There is one other difference also. Only one of the two actually holds any AAPL. If Buffet is all about valuation and buying into strong companies that create value for the longterm, then why doesn't he own any AAPL? I guess it must not look like a good proposition for him.

Buffett does not invest in tech. He's not even invested in his best friend's (Bill Gates's) company.

(See that a couple of others noted this too.)
post #40 of 58

Why listen to the guy who has probably made more money in the stock market that anyone else.....????

 

Hedge fund guys are so  much more reliable....

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