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Why Apple, Inc decided to split its stock 7-1 - Page 3

post #81 of 99
Quote:
Originally Posted by Eric38 View Post

If an individual investor is selling an $80 share and paying $5 to $15 in fees to a broker, there is no hope for said investor.

You do understand that the cost of $5 to $15 is for the trade, not for each share, right? If you only buy or sell one share at $85 then the trade will cost you $5 to $15 but before June 9th happens that's not even an options since it's now about $600 per share. What if you only want to buy or sell $500? You can't, but as of June 9th you can and it will cost you $5 to $15 at most internet-based brokerage firms.

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post #82 of 99
Quote:
Originally Posted by Frood View Post
 

I believe they do it because they want to change the world- and if you look at the projects they are doing most are consistent in that track and may not make Google a dime.  Having that much control is what allows them to do the moonshot projects that would not be allowed at more traditional companies- and that's what I think they are concerned about losing the ability to do.  

 

If not having a say in a company and knowing that they do far-fetched projects rubs you the wrong way- I definitely wouldn't recommend Google shares for you.

 

 

Google has about 665 million shares outstanding. Larry and Sergey only have about 47 million voting shares, but they can dominate any shareholder vote because those shares equate to about 470 million votes.  It somewhat rubs me the wrong way that they have roughly 5-10% of the economic investment but 100% of the control.  

 

Which equates to a lack of accountability.  They could do whatever they want like moonshot projects or pet projects that don't make Google a dime and the other shareholders who economically own about 90% of the company will be picking up the tab to the tune of up to 90 cents of every dollar spent.

 

Still, they've been rather benevolent dictators so far and haven't wasted too much of their shareholder's money so far so this potential lack of accountability isn't a serious issue to me until either either Larry or Sergey dies.  Or money/power corrupts them.  Sure, they have a fleet of several private jets, a yacht and take expensive vacations, but yeah, I don't think they're primarily motivated by money either. Brin has a genetic mutation that is linked to Parkinson's disease so he's spent at least $50 million on that pet project personally.

 

Google has an incredible competitive moat which is a huge plus, but more importantly to me is that Google is overpriced - it would have to either double its earnings or plunge its share price by 50% to reach the same PE as Apple.  That's the primary reason why I have Apple shares but not Google shares.

 

 

 

Quote:
Originally Posted by shahhet2 View Post


1. What does class B shares have anything to do with current split between class a and class c?
It was there even before split.
2. What stops you or any investor from selling your class C shares without voting power with class A?
As he explained, this was done for employee stocks.
Try to understand the purpose before blinding bashing.

As far as Ownership % goes, this is very common Where company was invented by 1-2 person entity.
For eg. Microsoft with Bill gates before recent release of shares for charity or Google or Facebook.
They invented the company and keeping voting power, which is obvious. What is wrong with that?

1. Class A wasn't the only class that was split - Class B also got split, so each Class B share also got a Class C.  On paper, Class A and Class B (and now the Class C) shares are all worth the same but see 2.

2. Class A is essentially Class C because since Sergey and Larry have about 470 million votes or about 55% of the votes, your vote will never amount to anything.  Their share holdings doubled in count and they can sell half their shares (the C, not the B) without losing an iota of control.

 

"as he explained, this was done for employee stocks"

That's naive.  Do you really need to hear it coming from Sergey or Larry's mouth that they want to be able to sell half of their Google stocks but still wield absolute control?

 

"What is wrong with that"

See my reply to Frood about lack of accountability and pet projects - selling shares to investors (to raise money for private jets, yachts, etc), not giving out a dividend, and not yielding control. And to add insult to injury, possibly getting those investors to subsidize your pet projects.  It's called having your cake and eating it too.

 

No I'm not blind bashing.  It doesn't look like you understand the situation clearly.

 

The bottom line is we actually don't know yet how shareholder friendly Larry and Sergey are.  The stock has been on a tear as it is still in growth mode, and you can't tell in growth mode.  

 

Coming back to Apple, Steve Jobs was actually not very shareholder friendly at all, but the stock was on a tear so no one cared.  Cook is a million times more shareholder friendly what with his annually-raised dividends and the huge stock buybacks.  

 

On salesmanship, Jobs has Cook beat, but other things like new product categories and stuff, 3 years is still too short to judge Cook on.  6 years total should be sufficient - that was how long it took apple from introducing the ipod to the iphone.  


Edited by Bravadu - 4/30/14 at 1:03am
post #83 of 99
Quote:
Originally Posted by SolipsismX View Post


You do understand that the cost of $5 to $15 is for the trade, not for each share, right? If you only buy or sell one share at $85 then the trade will cost you $5 to $15 but before June 9th happens that's not even an options since it's now about $600 per share. What if you only want to buy or sell $500? You can't, but as of June 9th you can and it will cost you $5 to $15 at most internet-based brokerage firms.

You are not getting his point.

 

His point is that if you're only only buying one share for $80 and paying $5-$15 in fees, then paying the same fees to sell, you would need to have that single share appreciate by $10-$30 just to break even.  Your only earning is anything above and beyond that $10-$30, after taking into account inflation and tax paid on that inflation, of course.

 

and thus "there is no hope for said investor"

 

ie if you're buying only 1 share [post split], you should get your brain examined.  Maybe you got dropped on your head as a baby.

post #84 of 99
Quote:
Originally Posted by Bravadu View Post

You are not getting his point.

His point is that if you're only only buying one share for $80 and paying $5-$15 in fees, then paying the same fees to sell, you would need to have that single share appreciate by $10-$30 just to break even.  Your only earning is anything above and beyond that $10-$30, after taking into account inflation and tax paid on that inflation, of course.

and thus "there is no hope for said investor"

ie if you're buying only 1 share [post split], you should get your brain examined.  Maybe you got dropped on your head as a baby.

Oh, I got that, hence my reply. What I didn't understand is the implication that Apple shouldn't split the stock because a one share purchase is not more costly as a percentage of the trade when I have never come across a situation where one buys a certain unit number without any consideration for its price. That makes the whole premise worthless.

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post #85 of 99
Quote:
Originally Posted by Bravadu View Post
 

 

 

Google has about 665 million shares outstanding. Larry and Sergey only have about 47 million voting shares, but they can dominate any shareholder vote because those shares equate to about 470 million votes.  It somewhat rubs me the wrong way that they have roughly 5-10% of the economic investment but 100% of the control.  

 

Which equates to a lack of accountability.  They could do whatever they want like moonshot projects or pet projects that don't make Google a dime and the other shareholders who economically own about 90% of the company will be picking up the tab to the tune of up to 90 cents of every dollar spent.

 

Still, they've been rather benevolent dictators so far and haven't wasted too much of their shareholder's money so far so this potential lack of accountability isn't a serious issue to me until either either Larry or Sergey dies.  Or money/power corrupts them.  Sure, they have a fleet of several private jets, a yacht and take expensive vacations, but yeah, I don't think they're primarily motivated by money either. Brin has a genetic mutation that is linked to Parkinson's disease so he's spent at least $50 million on that pet project personally.

 

Google has an incredible competitive moat which is a huge plus, but more importantly to me is that Google is overpriced - it would have to either double its earnings or plunge its share price by 50% to reach the same PE as Apple.  That's the primary reason why I have Apple shares but not Google shares.

 

 

 

1. Class A wasn't the only class that was split - Class B also got split, so each Class B share also got a Class C.  On paper, Class A and Class B (and now the Class C) shares are all worth the same but see 2.

2. Class A is essentially Class C because since Sergey and Larry have about 470 million votes or about 55% of the votes, your vote will never amount to anything.  Their share holdings doubled in count and they can sell half their shares (the C, not the B) without losing an iota of control.

 

"as he explained, this was done for employee stocks"

That's naive.  Do you really need to hear it coming from Sergey or Larry's mouth that they want to be able to sell half of their Google stocks but still wield absolute control?

 

"What is wrong with that"

See my reply to Frood about lack of accountability and pet projects - selling shares to investors (to raise money for private jets, yachts, etc), not giving out a dividend, and not yielding control. And to add insult to injury, possibly getting those investors to subsidize your pet projects.  It's called having your cake and eating it too.

 

No I'm not blind bashing.  It doesn't look like you understand the situation clearly.

 

The bottom line is we actually don't know yet how shareholder friendly Larry and Sergey are.  The stock has been on a tear as it is still in growth mode, and you can't tell in growth mode.  

 

Coming back to Apple, Steve Jobs was actually not very shareholder friendly at all, but the stock was on a tear so no one cared.  Cook is a million times more shareholder friendly what with his annually-raised dividends and the huge stock buybacks.  

 

On salesmanship, Jobs has Cook beat, but other things like new product categories and stuff, 3 years is still too short to judge Cook on.  6 years total should be sufficient - that was how long it took apple from introducing the ipod to the iphone.  

Lol, Sometime you feel like hitting your head against wall, or just arguing with person who doesn't understand a,b,c of stocks/investments.

You are one of that,

As per your comment, after split, Sergey and Larry who had 55% holding and now got double the stocks without loosing their voting power, so does average consumer.

What did changed in terms of voting power before and after split?

Your stock got doubled as well and you can sell half of shares without loosing voting power that you had before the split.

Do understand that Class B was present even before split and general public/investor didn't had any control of those shares.

So tell me again, how does this split impacts with what happened to Class B?

If you are general public and if you owned 1% of X company, you still own 1% of company after split, got it?

Or I should just stop banging my head against wall from now on.

If they are able to sell half of their stocks without reducing their holding (By selling Class C and holding Class B), Even you can sell your half of your holding (By selling all of Class C shares) shares and keeping your class A shares and you still own 1% of company after you sold half of your shares, now got it !!! 

Nothing  is changed for general investor. You still have same % of voting power as owners before and after split. New stocks they issue to employees will be class C, that's all.

Do you even remember that original point was what impact does ordinary shareholder have after this split? I guess not.


Edited by shahhet2 - 4/30/14 at 6:19am
post #86 of 99
Quote:
Originally Posted by SolipsismX View Post


Oh, I got that, hence my reply. What I didn't understand is the implication that Apple shouldn't split the stock because a one share purchase is not more costly as a percentage of the trade when I have never come across a situation where one buys a certain unit number without any consideration for its price. That makes the whole premise worthless.

I have a coworker who owns exactly one share of Apple.  I am not making this up.

 

One way this benefits me is that if I wanted to buy more Apple shares, I have less money left over potentially.  Like making a purchase and having $510 left over in my brokerage account because the shares cost $540 each.

post #87 of 99
Quote:
Originally Posted by shahhet2 View Post
 

Do you even remember that original point was what impact does ordinary shareholder have after this split? I guess not.

The general public does not get directly impacted, but indirectly, they are.

 

With every such split, the controllers have their financial stakeholdership in Google halved, and if you cannot see how that is bad for the rest of the Google shareholders, then you probably have your head buried in the sand.

 

Pre-split, 5% of the company's total shares plus one share was needed to control the company, provided that those shares were Class B.

Now, only 2.5% is needed because half of the total shares outstanding are voteless.

 

We don't know what the future will bring, but one thing we're sure of is that Larry and Sergey will eventually die, whether from natural causes at age 100 or yacht sinking.  It's very likely that the new controllers (using today's numbers as an example) claim that $531 is too expensive for an ordinary investor so they declare a 10:1 split and every A, B and C share gets 9 C shares each.  They can sell 90% of their holdings, retaining 0.25% of Google shares yet still wield full control.


Edited by Bravadu - 4/30/14 at 8:11am
post #88 of 99
Quote:
Originally Posted by wwwwww View Post

Like the ones with money.

Yeah, it's too bad idiots have money. Berkshire Hathaway seems to have it right, don't cater to the idiots.
Quote:
Originally Posted by Bravadu View Post

I have a coworker who owns exactly one share of Apple. I am not making this up.

One way this benefits me is that if I wanted to buy more Apple shares, I have less money left over potentially. Like making a purchase and having $510 left over in my brokerage account because the shares cost $540 each.

Yeah, and you're buying proportionally less of a company than you would if you bought your entire allotment.

I'm pretty sure you can buy fractional shares.
Edited by JeffDM - 4/30/14 at 11:37am
post #89 of 99
Quote:
Originally Posted by JeffDM View Post

Yeah, it's too bad idiots have money. Berkshire Hathaway seems to have it right, don't cater to the idiots.

At $190k a share there are a lot of people with money that won't ever be able to consider a longterm investment.

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

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post #90 of 99
Quote:
Originally Posted by SolipsismX View Post

At $190k a share there are a lot of people with money that won't ever be able to consider a longterm investment.

Is it a stock that you can only buy in integers?
post #91 of 99
Quote:
Originally Posted by JeffDM View Post

Is it a stock that you can only buy in integers?

Ah, you did mention fractional shares. I've never done it nor do I know anyone that has. I've only ever read about it but it seems like it's a "feature" at particular brokerage firms, not something you can generally do.

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

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post #92 of 99
Quote:
Originally Posted by SolipsismX View Post

Psychologically, reaching $165/share rather than $1160 per share to become a trillion dollar company seems more achievable.

Of course, the lower the share price the more investors there can be so the stock could become more volatile but in this day and age with such easy and cheap trades I think this adds to the volatility the way an electron adds to the weight of an atom.

I think you're right in a way.

 

You would expect the shares to be more volatile, all things being equal. However, traders got into a habit of manipulating Apple's shares and taking their profits every Friday. The split will make this a much more expensive option, so it could help to moderate the share-price on the weekly level.

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post #93 of 99
Quote:
Originally Posted by digitalclips View Post


I'm thinking that $165 is doable with in 18 to 24 months. What say you oh wise one? 1smile.gif

May 2015.

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post #94 of 99
Quote:
Originally Posted by TheWhiteFalcon View Post

I was glad to hear about the split, as I can hopefully pick up a few shares at a reasonable price. As long as it ends up being in the $70-$90 range when the split happens.

If it's in the $70-$90 range, Apple will be in dire straits. -Oh, you mean, AFTER the split? ;)

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post #95 of 99
Quote:
Originally Posted by Dick Applebaum View Post


I thought the article was excellent ...

except for the highlighted section above.

It seems DED/Corrections cannot resist a childish outburst to try to further his agenda or a perceived slight.

What does any of this have to do with the reasons and mechanics of Apple's stock split?

Everything.

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post #96 of 99
Quote:
Originally Posted by mvigod View Post
 

 

Sure he didn't say they would never do it BUT he did say this:  "And the current information we have would suggest that there's very little support that it helps the stock."

 

So what changed from May 2012 and every quarter after that up until last week?  What new information did they have?  Was it possible the current information was all the same as it was in May 2012 (because guess what, it was) and Cook just interpreted the same information the wrong way back then.  He realized from the same information NOW that his old decision on that same information was 180 degrees wrong and flipped.  Good for him for finally doing it. Shame on him for not getting it right the first time.

 

They simply felt they were above it and would win the special race to $1000/share.  Or perhaps they didn't understand the psychology of splits that they do today.  Had Cook read my letters it was all spelled out for him.  

 

 As a result lost the coveted race to $1000 (google won) and alot more.  The stock became a laughing stock and shunned by many.  Today it is still well off over 100/share from it's all time high (15%) which many argue at 700/share was STILL cheap. Today it continues to trade for a cheap valuation and Cook allowed the stock to be "broken".  It will always be a cheap stock based on valuation because of this mistake and lack of foresight.   I lost confidence in Cook and time will show why.  I'm an apple fan and user too so I should be biased in favor of Apple's future.  Been using macs and apple products since 1990.  I own 5 ipads, 3 iphones, ipad mini, several ipods, macbook and imacs.   It's actually as a user I see the holes in the boat now.

If I had your attitude, I would consider myself a greedy idiot who deserved to lose everything he had.

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post #97 of 99
Quote:
Originally Posted by JeffDM View Post


Is it a stock that you can only buy in integers?

 

Quote:
Originally Posted by SolipsismX View Post


Ah, you did mention fractional shares. I've never done it nor do I know anyone that has. I've only ever read about it but it seems like it's a "feature" at particular brokerage firms, not something you can generally do.

 

Almost no brokerage firms allow normal fractional share purchases as far as I know except one - folioinvesting which has a unique twice-daily window trading in which you're not actually buying but rather rebalancing your portfolio.  I thought about going with them but ultimately decided not to because I don't trade all that much - I'm more of a buy and hold kinda guy.

 

The other way to get fractional shares is through dividend reinvestment which some brokerage firms have such as Vanguard.  Selling is not as seamless though, but it's not too bad - better than not having dividend reinvestment.

post #98 of 99
Quote:
Originally Posted by AppleInsider View Post


Dividing the stock price by 7 results in an entirely new set of numbers that aren't easy to mentally translate in comparisons with past expectations. This is similar to how a tourist--in a country where the local currency is an unfamiliar fraction of the value of the currency his expectations are set in--now looks at prices in a new way.

I had to save this one.

I think the author actually thinks that stock investors can't divide by seven.

I'm amazed. I'm very, very amazed.

No sir, we were there long before you thought of dividing by seven.

It's not a NEW set of numbers, they've been around for a little while.
post #99 of 99
Quote:
Originally Posted by Silver Shadow View Post

Quote:
Originally Posted by AppleInsider View Post


Dividing the stock price by 7 results in an entirely new set of numbers that aren't easy to mentally translate in comparisons with past expectations. This is similar to how a tourist--in a country where the local currency is an unfamiliar fraction of the value of the currency his expectations are set in--now looks at prices in a new way.

I had to save this one.

I think the author actually thinks that stock investors can't divide by seven.

I'm amazed. I'm very, very amazed.

No sir, we were there long before you thought of dividing by seven.

It's not a NEW set of numbers, they've been around for a little while.

You're missing his point. He's saying that it's psychologically significant. If it had been a 10-1 stock split, everyone would easily compare the old and the new stock prices. So $700, which was Apple's high watermark, would be $70, for instance. Because it's 7-1, it's not so obvious to compare-that's all. So there is a reset mentally.
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