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Short sellers 'mugged' Apple stock in late April

post #1 of 70
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Shares of Apple stock were bludgeoned down to their lowest price in over a year in April, thanks in part to an assault by short sellers who took a record interest in the company late in the month.

AAPL


Short interest in Apple doubled to a record 41.6 million shares between April 15 and April 30, Philip Elmer-Dewitt of Apple 2.0 revealed on Tuesday. In his words, shares of Apple were "mugged" by short sellers, who drove the price of AAPL stock to its lowest level in over a year.

Ahead of its second-quarter earnings report, shares of AAPL dropped to just over $385, a level not seen since 2011. Apple's stock began its tumble in September of 2012, around the launch of the iPhone 5.

Many investors believe Apple put a floor under its share price in April when it announced a massive $100 billion capital return program that will run through 2015. That includes an increase of Apple's quarterly dividend by 15 percent, and a $60 billion share repurchase plan, which is the largest in history.

In particular, Apple's capital reinvestment plans have won over Greenlight Capital Chairman David Einhorn, who made waves earlier this year when he attempted to persuade the company to offer preferred shares. Also
post #2 of 70
This is an outrage! I knew something like this was happening.
post #3 of 70

Big deal. It can work both ways. Short sellers getting squeezed (and therefore being forced to buy to cover) are, on the other hand, believed to be responsible for a large part of Tesla's remarkable share price run-up (see, e.g., http://bloom.bg/12tGflk).

 

The bottom line with AAPL currently is blah sentiment. Unless that changes, it'll be a back and forth in the $400s. Nothing much can change that except for real news.

 

As I've said before, it's a bleak summer for AAPL (and AI, which is forced to cover Samsung's every move).

post #4 of 70
Stock manipulation is illegal. People who have spread lies about companies to drive their stock prices one way or the other (mostly down) have rightfully gone to jail for this. Why aren't regulators doing anything about the obvious campaigns of lies and smears against Apple?

I guess the Rule of Law isn't what it used to be.
post #5 of 70
New laws.
Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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Citing unnamed sources with limited but direct knowledge of the rumoured device - Comedy Insider (Feb 2014)
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post #6 of 70
Quote:
Originally Posted by anantksundaram View Post

Big deal. It can work both ways. Short sellers getting squeezed (and therefore being forced to buy to cover) are, on the other hand, believed to be responsible for a large part of Tesla's remarkable share price run-up (see, e.g., http://bloom.bg/12tGflk).

 

The bottom line with AAPL currently is blah sentiment. Unless that changes, it'll be a back and forth in the $400s. Nothing much can change that except for real news.

 

Which means, bottom line, that stock prices CAN be manipulated by large investors like hedge funds. It means the small or individual investor is at the mercy of these thugs, and it's all nice and legal. No wonder burying your money in a tin can in the back yard sounds good to some people.

post #7 of 70
Quote:
Originally Posted by Ireland View Post

New laws.

 

Quote:
Originally Posted by macFanDave View Post

Stock manipulation is illegal. People who have spread lies about companies to drive their stock prices one way or the other (mostly down) have rightfully gone to jail for this. Why aren't regulators doing anything about the obvious campaigns of lies and smears against Apple?

I guess the Rule of Law isn't what it used to be.

There is no rule that says that asset prices must only go up and you must only be 'long' an asset. It's perfectly reasonable and legal to bet on, and profit from, falling prices if you think that an asset is overvalued.

 

If we got rid of short-selling, we'd run the risk of being in endless asset bubbles. We'd also then have to get rid of put options (and by inference, all kinds of portfolio insurance).

 

I am not suggesting that AAPL is remotely overvalued -- in fact, I personally beleive it's terribly undervalued, and choose to put my $$ on the long side -- but rather, just pointing out the fact that short sales help make a market efficient and keeps prices from running wild.

post #8 of 70

Isn't it time they moved the stock exchange to Las Vegas where it belongs?

post #9 of 70
Quote:
Originally Posted by lkrupp View Post

 

Which means, bottom line, that stock prices CAN be manipulated by large investors like hedge funds. It means the small or individual investor is at the mercy of these thugs, and it's all nice and legal. No wonder burying your money in a tin can in the back yard sounds good to some people.

No, you're wrong. There is absolutely no necessary implication of 'manipulation' just because TSLA went up. This is simply the case of demand for a stock driving up its price. The reason for the demand, in this case, is those on the short side seeking to cover their short sale -- they will have lost their shirt (and then some), in the process of doing this.

 

If you -- or the market -- think TSLA is too high-priced (because it's being 'manipulated'), then you can put your money where your expectation is, and buy put options (or do a short sale)!

 

It is simply a bet that prices would fall, and when that bet goes awry, these guys had to purchase the stock at any price to cover their a$$e$.

post #10 of 70
Quote:
Originally Posted by dsect View Post

Isn't it time they moved the stock exchange to Las Vegas where it belongs?

If you go to Vegas and play the games without learning them first, you lose. It's the same with finance. You should learn what to do before you jump in.

post #11 of 70
Oh please. AAPL is the biggest, most liquid stock in the world. It trades 20M shares every day. Going from 20M to 40M shares short over the course of a month isn't even a blip; that did not and could not drive the price down 45%.

AAPL went down b/c earnings estimates were way too high, mainly due to gross margins but also to number of units. Analysts got ahead of themselves. Now maybe they've gotten too bearish, but time will tell.

Also, remember that for every short sell transaction, there is a BUYER on the other side of the transaction. One other thing to note. ALL short sellers have an obligation to buy in the future. This often puts a floor under a stock when other buyers are reticent to step in and "catch a falling knife". People who want to change the laws learn the hard way that volatility massively increases, just the opposite of the desired result.
post #12 of 70
Quote:
Originally Posted by chabig View Post

If you go to Vegas and play the games without learning them first, you lose. It's the same with finance. You should learn what to do before you jump in.

 

The big difference, however, is that in Vegas the $2.00 gambler doesn't get to sit at the same table with the guys that are betting $20,000.00 and up per hand. With fund managers managing millions of dollars from all of us $2.00 gamblers, we don't get much of a say, particular when you consider that all share transactions generate a commission for someone, win or lose. This is clearly a case of too much control in too few hands and until that ability is dampened the stock market will continue to be a place where muggings will occur on a regular basis.
See, in the record business, you can show someone your song, and they don’t copy it. In the tech business, you show somebody your idea, and they steal it. (Jimmy Iovine)
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See, in the record business, you can show someone your song, and they don’t copy it. In the tech business, you show somebody your idea, and they steal it. (Jimmy Iovine)
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post #13 of 70
Quote:
Originally Posted by anantksundaram View Post

The bottom line with AAPL currently is blah sentiment. Unless that changes, it'll be a back and forth in the $400s. Nothing much can change that except for real news.

 

As I've said before, it's a bleak summer for AAPL (and AI, which is forced to cover Samsung's every move).

 

But even with all your dire predictions Apple is, as of right now, still the most valuable company in terms of market capitalization. That's some "blah sentiment" isn't it? They can swing aimlessly around in the $400s and still be worth more than anybody else. How much higher does AAPL have to go for it not to be a "bleak" summer? 

post #14 of 70
All I can say is THANK YOU for the cheap shares. I picked up more during that period.
post #15 of 70
Quote:
Originally Posted by lkrupp View Post

 

But even with all your dire predictions Apple is, as of right now, still the most valuable company in terms of market capitalization. That's some "blah sentiment" isn't it? They can swing aimlessly around in the $400s and still be worth more than anybody else. How much higher does AAPL have to go for it not to be a "bleak" summer? 

1) It is only 'dire' if you have the investing horizon of a gnat.

 

2) 'Most valuable' means nothing. All that matters is 'value' relative to expected future cash flows and risk (or as a crude short-cut, something like the P/E ratio).

 

3) $600. But I don't expect that this summer. If I am wrong, I can live with that......1biggrin.gif

post #16 of 70
Quote:
Originally Posted by macFanDave View Post

Stock manipulation is illegal. People who have spread lies about companies to drive their stock prices one way or the other (mostly down) have rightfully gone to jail for this. Why aren't regulators doing anything about the obvious campaigns of lies and smears against Apple?

I guess the Rule of Law isn't what it used to be.

 

There is nothing illegal in shorting a stock.  Trying to drive down the stock with false news could be investigated depending on youre status or media.

 

Apple did what they had to do regarding shareholders, the return to investment in terms of dividends and buyback is outstanding. This is why dips around $400 are getting violent rebounds because the stock P/E drops below 10 and the yield gets to 3% at those levels. Professional short sellers will cover depending on who's buying. Around $400 the big value funds get in and there is no stopping them. So the short covers, which makes the stock rebound even more.

 

The market average P/E is 15.5, so Apple is well below it. IF you take into account the div yield and the new stock buybacks Apple return on investment is around 6%-7%, which should support a stock price of around $500 in a no growth environnment.

 

So whats keeping the stock down?  Fears of declining EPS is, and lack of innovation.  This the second part of what Tim Cook needs to do for the company, put back Apple into growth mode again and this is only achievable with innovation. The market is discounting a lot of bad news at the current price point, so any kind of good innovation could rebound the stock to the mid $550 in a very short period of time.

 

BTW Tim Cook will be on AllthingsD tonight:  http://goo.gl/S4oGX


Edited by herbapou - 5/28/13 at 9:49am
post #17 of 70
Quote:
Originally Posted by herbapou View Post

There is nothing illegal in shorting a stock.  Trying to drive down the stock with false news could be investigated depending on youre status or media.

Apple did what they had to do regarding shareholders, the return to investment in terms of dividends and buyback is outstanding. This is why dips around $400 are getting violent rebounds because the stock P/E drops below 10 and the yield gets to 3% at those levels. The market average P/E is 15.5, so Apple is well below it. IF you take into account the div yield and the new stock buybacks Apple return on investment is around 6%-7%, which should support a stock price of around $500 in a no growth environnment.

So whats keeping the stock down?  Fears of declining EPS is, and lack of innovation.  This the second part of what Tim Cook needs to do for the company, put back Apple into growth mode again and this is only achievable with innovation. The market is discounting a lot of bad news at the current price point, so any kind of good innovation could rebound the stock to the mid $550 in a very short period of time.

BTW Tim Cook will be on AllthingsD tonight:  http://goo.gl/S4oGX
What's your definition of innovation? Because it seems Wall Street's definition is a 5" phone and a cheap plastic phone. And maybe the cheap plastic phone is 5" too.
post #18 of 70
Quote:
Originally Posted by Ireland View Post

New laws.

yeah one that say when the so call experts and analysis make statement of fact, even when they trying to preference it with statement like IMHO, they should required to back those statement up and explain how they came up with those so call facts and what was their reasons for making them.

 

If these people had to worry about someone following up on them I bet they would stop the speculating.

post #19 of 70
Quote:
Originally Posted by Rogifan View Post


What's your definition of innovation? Because it seems Wall Street's definition is a 5" phone and a cheap plastic phone. And maybe the cheap plastic phone is 5" too.

 

imo a 5" phone and a cheap emerging market phone would fall into the "execution" category. On tops on subpar innovation, the markets thinks Apple is also doing a bad job on execution. Apple should enter those markets, that would help EPS but its not going to WoW people. To me those products are important because they would support critical mass of the ecosystems. Apple needs to preserved its ecosystem and should offer something at the low end, because they are the only makers of iOS hardware, nobody is going to do it for them.

 

To me good innovation is a WoW thing, something nobody saw coming. Something that makes you say 'omg I must buy this'.


Edited by herbapou - 5/28/13 at 10:26am
post #20 of 70

If Tim Cook wasn't such a bow wow CEO AAPL wouldn't be such a dog of a stock! Another down day in an up market? I have personally been waiting to buy a Retina iPad mini since the day the mini came out. The longer I wait the lower AAPL will sink because there are millions of people waiting for Apple to stop resting on its past laurels and release a modern f-ing product! Jeez.

post #21 of 70
Quote:
Originally Posted by Rogifan View Post


What's your definition of innovation? Because it seems Wall Street's definition is a 5" phone and a cheap plastic phone. And maybe the cheap plastic phone is 5" too.

What's yours? A thinner phone? Because in recent years this is all Apple is doing. They make things thinner. That's their definition of innovation.

post #22 of 70
Originally Posted by herbapou View Post
There is nothing illegal in shorting a stock.

 

Nonsense.


So whats keeping the stock down? …lack of innovation.

 

So… idiots.

Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

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Originally Posted by Slurpy

There's just a TINY chance that Apple will also be able to figure out payments. Oh wait, they did already… …and you’re already fucked.

 

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post #23 of 70
Quote:
Originally Posted by Tallest Skil View Post

Originally Posted by herbapou View Post
There is nothing illegal in shorting a stock.

 

Nonsense.

Umm.... sorry, TS, but you need to educate yourself a bit on this particular issue.

 

Here, I'll help you. This is a good place to get started: http://www.sec.gov/answers/shortsale.htm

post #24 of 70
Quote:
Originally Posted by MJ Web View Post

If Tim Cook wasn't such a bow wow CEO AAPL wouldn't be such a dog of a stock! Another down day in an up market? I have personally been waiting to buy a Retina iPad mini since the day the mini came out. The longer I wait the lower AAPL will sink because there are millions of people waiting for Apple to stop resting on its past laurels and release a modern f-ing product! Jeez.

 

They just didnt had the screen tech to do a retina mini last year. Imo we will get it this year. The regular ipad should be thinner and lighter too if they changed the screen tech.

post #25 of 70
Quote:
Originally Posted by lkrupp View Post

 

But even with all your dire predictions Apple is, as of right now, still the most valuable company in terms of market capitalization. That's some "blah sentiment" isn't it? They can swing aimlessly around in the $400s and still be worth more than anybody else. How much higher does AAPL have to go for it not to be a "bleak" summer? 


Dire predictions???

 

Oh, yes... Anan's comment was just chock full of dire predictions.   1rolleyes.gif

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post #26 of 70
Quote:
Originally Posted by macFanDave View Post

Stock manipulation is illegal. People who have spread lies about companies to drive their stock prices one way or the other (mostly down) have rightfully gone to jail for this. Why aren't regulators doing anything about the obvious campaigns of lies and smears against Apple?

Indeed. It wasn't Apple performance so much as the rumors and unnamed sources that killed the stock price. Trouble is proving the source lied or isn't real and it was just to play with the price. Which is basely impossible

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 #27 of 70
Quote:
Originally Posted by dsect View Post

Isn't it time they moved the stock exchange to Las Vegas where it belongs?

 

 

You are funny.

post #28 of 70
LOL! Back in January Apple posted the greatest quarter of its existence; yet their stock price still fell.
How could that be? Go ask Lloyd Blankfein from Goldy Sachs aka Arthur Jenssen from NETWORK. LOL!
And the reason nobody is touching this, as far as I can see, is because this BS is at the heart of America's economic system.
It's a ponzi scheme through and through.The folks at the top got their cut, crashed the stock and cleaned up. What happened to the money you put in when Apple's stock was that high? GONE BABY GONE!
And FDIC doesn't cover stocks nor bonds.
Hey, remember Casino Royal with Daniel Craig? Le Chiffre tried shorting the stock on that airline by using a terrorist to blow up that new airliner.
It is the same old six and seven(SAME OLD SH**).
post #29 of 70

There's nothing wrong with shorting AAPL or any other stock. That's how markets work. As a matter of fact, I've shorted AAPL a few times myself.

 

What is wrong and illegal are the BS rumor spreaders, who write false stories about Apple with the intent to manipulate the market. These people should be behind bars.

post #30 of 70
Yup, every transaction has a buyer and a seller, and short sellers simply add liquidity and let the market do what it's supposed to do. No surprise that a site like AppleInsider would use terms like "bludgeon", but let's all grow up already.
post #31 of 70
Short selling has a detrimental impact on investing and the markets in general and I completely disagree with it. In my opinion, financial markets should be there to allow investors (large or small) to invest in businesses and companies to prosper, not to bid on their failure. If you believe a company will fail, cash out your positions and invest elsewhere.
post #32 of 70
I'm hoping everybody will ignore jdnc 123's frothing about Tim Cook, and not do him the favor of quoting him. As he himself said the last time he was around, his posts don't matter anyway. That's really true, except in the larger sense of truth vs. lies.
post #33 of 70
Quote:
Originally Posted by r1sko View Post

If you believe a company will fail, cash out your positions and invest elsewhere.

 

It has nothing to do with if somebody believes that a company is going to fail.

 

I've shorted Apple a few times, and I definitely don't believe that Apple is doomed. Stocks swing up and down, and money can be made in both directions.

post #34 of 70
I keep trying to see if apple is buying back its shares @ if so, how many have been bought back. The only way I know of is to look up the total shares owned by apple. It hasn't budged, still at 938 million. I've looked on yahoo & and apples site. Does anyone know how I can find that info more accurately? It's stayed at 928 million shares and I'm thinking that info isn't accurate. @ I'm wondering if there's a specific place I can go to that has up to date info like that. Anyone know?
post #35 of 70
Quote:
Originally Posted by skleiniv View Post

I keep trying to see if apple is buying back its shares @ if so, how many have been bought back. The only way I know of is to look up the total shares owned by apple. It hasn't budged, still at 938 million. I've looked on yahoo & and apples site. Does anyone know how I can find that info more accurately? It's stayed at 928 million shares and I'm thinking that info isn't accurate. @ I'm wondering if there's a specific place I can go to that has up to date info like that. Anyone know?

There is no easy or obvious way to check this.

 

Best to write to Apple Investor Relations and ask: http://investor.apple.com/contactUs.cfm

 

The other option is to contact Apple's 'Transfer Agent,' whom he SEC charges with maintaining all the records associated with 'canceled' shares (after repurchase). They may or may not respond... http://investor.apple.com/faq.cfm?FaqSetID=5


Edited by anantksundaram - 5/28/13 at 2:49pm
post #36 of 70
Quote:
Originally Posted by Flaneur View Post

I'm hoping everybody will ignore jdnc 123's frothing about Tim Cook, and not do him the favor of quoting him. As he himself said the last time he was around, his posts don't matter anyway. That's really true, except in the larger sense of truth vs. lies.

Some people either have short or malleable memories because I can distinctly recall the stock dropping after Steve Jobs spoke. In fact, the largest and fastest drop in relative value was under Jobs and it jumped back up under Cook during Jobs's indeterminable hiatus.

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

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"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

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post #37 of 70
Quote:
Originally Posted by skleiniv View Post

I keep trying to see if apple is buying back its shares @ if so, how many have been bought back. The only way I know of is to look up the total shares owned by apple. It hasn't budged, still at 938 million. I've looked on yahoo & and apples site. Does anyone know how I can find that info more accurately? It's stayed at 928 million shares and I'm thinking that info isn't accurate. @ I'm wondering if there's a specific place I can go to that has up to date info like that. Anyone know?

Have you compared both the number of shares owned by Apple and outstanding shares? Are these different?

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

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"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

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post #38 of 70

Tim Cook's interview at ATD11 at 9 PM Eastern today, here: http://allthingsd.com/20130528/coming-up-live-apple-ceo-tim-cook-kicks-off-d11/

post #39 of 70
Quote:
Originally Posted by SolipsismX View Post

Have you compared both the number of shares owned by Apple and outstanding shares? Are these different?

What do you mean by "number of shares owned by Apple" -- Apple does not own any of its own shares, afaik?

post #40 of 70
Quote:
Originally Posted by anantksundaram View Post

Tim Cook's interview at ATD11 at 9 PM Eastern today, here: http://allthingsd.com/20130528/coming-up-live-apple-ceo-tim-cook-kicks-off-d11/

Less than 2 weeks before we get our first Apple event since last October 2012. For once I want them to ask questions about future products I know he won't directly answer but that is probably just a bad case of appleitis.

"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

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"The real haunted empire?  It's the New York Times." ~SockRolid

"There is no rule that says the best phones must have the largest screen." ~RoundaboutNow

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