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Apple's buybacks exploited stock dips to generate billions in shareholder value - Page 3

post #81 of 94
Quote:
Originally Posted by ahurdly View Post
 

The stock is priced correctly based on todays expectations.  There's nothing exciting going on here, it's dead money.  Stock is back down today.  The execs wasted those billions without anything to show for it, market cap stays the same, they just have less shares and less money.  The company is focused on building monuments to their greatness, and not looking to the future.  Too scared that they'll make a mistake, they're frozen and letting the future pass them by.

 

The stock was at $385 before the buyback.  Its $535 today.  That's almost 40% up

 

Apple's average buyback price is about $475.

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post #82 of 94
"Based on today's expectations" means the average of everyone's expectations. Wall Street isn't a monolithic hive mind with a single opinion. Many people think the stock is undervalued.

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post #83 of 94
Quote:
Originally Posted by ahurdly View Post

The stock is priced correctly based on todays expectations.  There's nothing exciting going on here, it's dead money.  Stock is back down today.  The execs wasted those billions without anything to show for it, market cap stays the same, they just have less shares and less money.

To think of all the things $12b would buy. They could have bought a controlling share of Netflix or Tesla, IBM's low-end server business, Dropbox, Snapchat. Tim said they'd looked into options though and nothing was really to their liking but even if they buy something they aren't thrilled with, burning through cash just doesn't seem like the better option.
Quote:
Originally Posted by sog35 
The stock was at $385 before the buyback.

I think he means the latest buyback. Maybe it'll correct itself in a while.
post #84 of 94

The thing with stock price is it's not determined by what people think or feel, it's determined by what people are willing to pay for it.  If so many people think it should be worth more, they would buy and price would rise.  There's a reason why the price is where it's at and why it's been stuck where it's at.  

post #85 of 94

The cash used to buy the shares was always on the books, why would it attract more investors because that cash was removed and less shares are available on the open market.  Nothing fundamentally was changed with the company, everything before the stock purchase is exactly the same after the stock purchase, they just have less cash.  Stocks rise when expectations of future value is higher than current value, burning cash to buy shares does not raise future expectations.

post #86 of 94
Will this have an effect of future sell actions after earnings?
post #87 of 94
Quote:
Originally Posted by mvigod View Post

Looks like they should have listened to carl icahn and bought back 150B worth. If their tiny buyback was profitable they could have gained over 15B very quickly and retired an enormous amount of the float (almost 1/3 of it). Savings over the years from not paying out a dividend to 1/3 of the shares was an extra bonus. This as Icahn said was a no brainer. Apple just didn't have the confidence to go big. They may be missing a rare opportunity and already seem to possibly have missed the best chance they had. It may only get more expensive from here.

 

It's hard to say.  Depending on the economic condition, we may see another sub $500 days for Apple before the year end.
post #88 of 94
Quote:
Originally Posted by ahurdly View Post
 

The cash used to buy the shares was always on the books, why would it attract more investors because that cash was removed and less shares are available on the open market.  Nothing fundamentally was changed with the company, everything before the stock purchase is exactly the same after the stock purchase, they just have less cash.  Stocks rise when expectations of future value is higher than current value, burning cash to buy shares does not raise future expectations.

 

EPS increases.

Less shares means larger possible dividends in the near future

 

Go read a book on buybacks. Your knowlege of them is lacking

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post #89 of 94

@Marvin 

 

This is totally OT and not relevant, really, but as a huge French New Wave fan, I felt the need to say this.  You said:

 

Quote:
Stockholders and analysts are like film critics. They don't make the films, they wouldn't even know how, they just express their own reaction to the performance and assume it's indicative of who they try to represent.

 

Almost all the important filmmakers of the New Wave (Godard, Truffaut, Rivette, Rohmer, Chabrol, etc.) were critics at Cahiers du Cinema, a very important film criticism publication in Paris in the 50s.

 

As I said, totally irrelevant to the point being made. :)

post #90 of 94
Quote:
Originally Posted by AaronJ View Post

Almost all the important filmmakers of the New Wave (Godard, Truffaut, Rivette, Rohmer, Chabrol, etc.) were critics at Cahiers du Cinema, a very important film criticism publication in Paris in the 50s.

Ah, well except for those ones. More the Rottentomatoes.com critics 1wink.gif
post #91 of 94
Quote:
Originally Posted by Marvin View Post


Ah, well except for those ones. More the Rottentomatoes.com critics 1wink.gif

 

Oh, I agree.  Film criticism and filmmaking are as alike as selling golf clubs and being a pro golfer: They both have to do with the same thing in general, but are totally different disciplines.

post #92 of 94
Quote:
Originally Posted by rgh71 View Post

Quote:
Originally Posted by sflocal View Post


I


It is very hard to manipulate a stock price of a company of this size with this much volume. Apple's $14bn barely move it up. Everyone think about that. You guys have no concept of the market.



Apple is probably the most manipulated stock ever.
post #93 of 94
Quote:
Originally Posted by SudoNym View Post

Quote:
Originally Posted by rgh71 View Post

It is very hard to manipulate a stock price of a company of this size with this much volume. Apple's $14bn barely move it up. Everyone think about that. You guys have no concept of the market.

Apple is probably the most manipulated stock ever.

I think people assume that means from the trading activity but it's perhaps more accurate to say Apple stock traders are the most manipulated traders and they may not be people. 84% of trading activity is computers and computers read online news reports (not to say that all stock will be traded in this ratio but you'd never know):

http://www.ritholtz.com/blog/2012/04/machines-dominate-the-market-84-of-all-trades-hft/
http://www.washingtonsblog.com/2009/07/corporate-media-spotlights-distortion-of-market-by-high-frequency-trading.html

"(2009) Bloomberg interviewed the former head of Nasdaq, who says that high frequency traders account for 73% of the volume on the stock market, and skews the market when it gets out of balance.

The New York Times hits the issue pretty strongly, writing:

Nearly everyone on Wall Street is wondering how hedge funds and large banks like Goldman Sachs are making so much money so soon after the financial system nearly collapsed. High-frequency trading is one answer. Goldman Sachs is by far the largest program trader in the market, twice as large as the next biggest.

“This is where all the money is getting made,” said William H. Donaldson, former chairman and chief executive of the New York Stock Exchange and today an adviser to a big hedge fund. “If an individual investor doesn’t have the means to keep up, they’re at a huge disadvantage”…

PCs have been unable to compete with Wall Street’s computers. Powerful algorithms — “algos,” in industry parlance — execute millions of orders a second and scan dozens of public and private marketplaces simultaneously. They can spot trends before other investors can blink, changing orders and strategies within milliseconds.

High-frequency traders often confound other investors by issuing and then canceling orders almost simultaneously. Loopholes in market rules give high-speed investors an early glance at how others are trading. And their computers can essentially bully slower investors into giving up profits — and then disappear before anyone even knows they were there…"

"(2012) As of 2010, 50-70% of all stock trades were done by high frequency trading computer algorithms.

And many other asset classes are dominated by high frequency trading as well.

High-frequency trading distorts the markets. It lets the big banks peak at what the real traders are buying and selling, and then trade on the insider information.

Morgan Stanley has just shown (via the Financial Times) that the percentage of high frequency trading in the stock market has skyrocketed to 84%:

Trading by “real” investors is taking up the smallest share of US stock market volumes [since Morgan Stanley started keeping track 10 years ago.]

The findings highlight how US trading activity is increasingly being fuelled by fast turnover of shares by independent firms and the market-making desks of brokerages, many using high-frequency trading engines. [actually all of the market-making desks are using it.]

The proportion of US trading activity represented by buy and sell orders from mutual funds, hedge funds, pensions and brokerages, referred to as “real money” or institutional investors, accounted for just 16 per cent of total market volume in the form of buying, and 13 per cent via selling in the final quarter of last year, according to analysis by Morgan Stanley’s Quantitative and Derivative Strategies group."

It's a pretty anti-competitive practise really, allowing banks and people closest to the exchange to execute automated transactions in milliseconds while people on the outside have to do it all manually. They aren't bound by transaction fees so they can do as much activity as they want and this gives them privileged information as to how the market is going. Why doesn't the government bring in laws to limit transaction time and transaction volume and make allowances for the fact that a trading company can spawn multiple trading entities? The whole point of stocks and shares is to invest in companies producing things that are produced in human time. While news can drastically affect a stock value, they only need enough time to process 1 trade, not 1 million trades.
post #94 of 94
Quote:
Originally Posted by Marvin View Post


They are retiring them, which is why suggestions that they are buying them back cheap are not as meaningful as if they were to sell them later on or offer them to staff. Retiring them is equivalent to giving the cash used for the buyback to the remaining stockholders, most of which are institutions: index funds, banks, insurance companies etc but it also benefits staff holding stock.

 

Thanks, I know what retiring mean, I just never heard they were as I always thought it was only buying them back. I will have to go back and read the releases again. 

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