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Apple, Inc. bought back another $5 billion of $AAPL stock in Q3 as shares rose 20%

post #1 of 56
Thread Starter 
During its fiscal Q3 ending in June, Apple spent $5 billion to buy up its own stock off the market. Since the beginning of fiscal 2014, Apple has spent $28 billion to repurchase stock at average share prices between two-thirds and three-quarters of its current stock price.

AAPL capital return by shares


During the June quarter, Apple spent $5 billion buying back 58,661 shares at an average price of $85.23. Apple's investment partners are also continuing to to buy shares as part of the $12 billion Accelerated Share Repurchase program initiated in January, which will continue through 2014.

Apple's buyback program is not only the largest stock buyback program (setting multiple records both per quarter and in trailing twelve-month buyback activity) since the SEC enhanced the transparency of issue repurchases in 2005, but also arguably most successful program ever initiated.

AAPL buybacks Q3 2014


Apple's chief executive Tim Cook first announced Apple's current dividend and share buyback plan in March 2012. At the time, Apple's share price was around $85 (split adjusted).

However, by the time Apple's buyback program began at the start of fiscal 2013 (beginning in September 2012), Apple's share price began to collapse. The company's shares continued to fall and remain low throughout 2013, dipping as low as $55. That provided Apple with the perfect conditions to buy up its own stock.

Given the prevailing conditions, Apple immediately shifted from its originally conservative plan (which spent a total of $2 billion on buybacks in its first quarter) to a liberal outlay of $26 billion in calendar 2013 followed by $23 billion spent on buying up shares over the last six months of 2014.

Capt'n Cook's surreal milking of fleeing investors



Apple's establishment of a third ASR in late January helped the company to rapidly spend an incredible $14 billion on buybacks within a two week period, after industry analysts incited a stock panic that caused Apple's shares to plunge more than 8 percent following the company's Q1 release detailing its highest ever quarterly revenues and operating profits--results that the tech media depicted as "disappointing."

AAPL Q1 2014


Apple's shares since then have since appreciated almost 25 percent, nearly reaching the company's all time high ($100.01) set in September 2012, just prior to the beginning of the buybacks. Apple shares closed today at $97.67.

The dip and subsequent recovery of Apple's share price over the last two years has enabled the company's buyback plan to effectively generate tremendous returns for its shareholders from the "massive pile of cash" that some investors had expressed concerns about not generating high enough returns.

Despite having spent $51 billion on buybacks and more than $21 billion to distribute dividends since the beginning of fiscal 2013, Apple's cash holdings have grown from $121 billion when Cook first announced the capital return program to $164 billion at the end of June. Apple's buybacks and dividends have been paid from its domestic cash holdings, as well as a $31 billion debt offering that has given the company access to capital at absurdly low interest rates, secured by its reputation anchored by massive cash holdings overseas.

Even subtracting Apple's long term debt from its cash holdings results in a net gain of $12 billion despite the $73 billion spent on capital return programs over the last two years. At the same time, Apple has produced the best selling smartphone and tablet models globally (despite efforts by its competitors to brand it as "lacking in innovation") and has increased its Mac market share as the overall PC market shrinks.

ASR, matey



To leverage the most value from its cash holdings and take full advantage of the market's irrational turn, Apple used Accelerated Share Repurchase (ASR). Under an ASR, a company buys its shares from an investment bank, which essentially shorts the stock by borrowing shares (typically from its clients) which it then delivers to the company for a fixed, upfront price.

Over the term of the ASR agreement, the investment bank then seeks to buy shares to replace those it has borrowed. Buying back shares via an ASR is usually more expensive because the bank wants to profit from the transaction. However, the slight price premium allows the company to spend a fixed amount of money rapidly and immediately reduce its outstanding share count.

While Apple fronted the money right away and retired the initial proceeds of borrowed stock, the company's banking partner continued to buy back shares over the year-long term of the agreements, resulting in windfall of 1.1 million extra shares that were delivered to Apple for retirement in the quarter when the second ASR was settled. The average share price under the second ASR in 2013 was $69.55.

Investors who sold as Apple's stock plunged in paper value overnight from $78.50 to below $72 (and then continued there through the end of January 2014) unwittingly found Apple itself to be a willing buyer of the shares they abandoned. One week into February, the company's chief executive Tim Cook revealed that Apple's executive team had jumped at the rare opportunity and spent $14 billion of its remaining buyback budget to snatch up its shares at a discount.

http://ycharts.com/companies/AAPL/shares_outstanding


Following the $14 billion share grab, which included a third $12 billion ASR and an additional $2 billion in open market purchases, Apple spent an additional $4 billion in open market purchases throughout the rest of the spring quarter, resulting in the $18 billion total for fiscal Q2. Following its stock split, Apple now has 5.989 billion shares outstanding.

Apple has since continued its quarterly pace of buying back $5 billion in shares off the open market in the June quarter, and noted in SEC filings that it expects to continue, although it is not obligated to do so. Apple has another $39 billion set aside to buyback shares under its current capital return program, which is currently slated to continue through the end of calendar 2015.
post #2 of 56

I truly wonder if it makes sense to continue with the repurchase program at the current price (= $683.69, pre-split; all-time high is ~$705). It might have made more sense to be a bit more aggressive earlier. 

 

Given the parity in tax rates for qualified dividends versus capital gains, a special dividend with the remaining, planned $39B (~$6.50 per share) may not be such a bad idea...


Edited by anantksundaram - 7/25/14 at 2:14pm
post #3 of 56
Analysts: Constant share purchases by AAPL show they have no faith in the general investor. We're downgrading the stock to Overweight from Buy status.
You can't spell appeal without Apple.
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You can't spell appeal without Apple.
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post #4 of 56
Wall Street is watching Cook conduct a master class in share and cash management.
post #5 of 56
Echoing anantksundaram, it is now irresponsible to continue with a linear buyback.

That's the very thing bad management has historically done with its cash and has looked foolish because of it.

Apple can retire all of ~6.5% if it spent the whole buyback at current prices. If it continues buying appreciating stock, the value of the buyback will diminish to something well under 5%.

What the company should do instead is basically buy only if the price falls. It can't stop the stock from dropping if the market really wants that, but it can help act as a backstop if the price falls below, for example, $85 "buy this much"... below $80 "buy that much more."

From here, even at $5 billion per quarter, Apple won't be able to spend $39 billion. And if it spends it near the end, it looks even more foolish if the stock is at the high end 6 quarters from now.
post #6 of 56
So is it a master class or irresponsible? 1confused.gif
post #7 of 56
"Apple spent $5 billion buying back 58,661 shares at an average price of $85.23"

That would be 5 Million worth.
post #8 of 56
Apple Net Income for the last 4 quarters is $38.555 billion. That gives us a yearly EPS of (38.555/5.989=) $6.44/share. At today's closing price of $97.67, that's equivalent to a P/E of 15.17.

Given this very low P/E ratio, and considering that the company intends to buy back another $39 billion dollars of its own stock, that P/E ratio has nowhere to go but down. And that's assuming earnings are flat. Of course, earnings are projected to accelerate as Apple is just about to both enter its peak earnings season and release a whole new slate of upgrades and new products. That will slam the P/E ratio even more.

Two things can happen: (1) The price stays low, the P/E shrinks, and Apple makes out like a bandit buying back its stock with huge bang per buck; (2) The price compensates for the lowering P/E ratio and Apple ends up buying back less stock, but still an appreciable amount.

This is a classic win/win for Apple and for long term investors in AAPL.
post #9 of 56
Quote:
Originally Posted by markrogo View Post

Echoing anantksundaram, it is now irresponsible to continue with a linear buyback.

That's the very thing bad management has historically done with its cash and has looked foolish because of it.

Apple can retire all of ~6.5% if it spent the whole buyback at current prices. If it continues buying appreciating stock, the value of the buyback will diminish to something well under 5%.

What the company should do instead is basically buy only if the price falls. It can't stop the stock from dropping if the market really wants that, but it can help act as a backstop if the price falls below, for example, $85 "buy this much"... below $80 "buy that much more."

From here, even at $5 billion per quarter, Apple won't be able to spend $39 billion. And if it spends it near the end, it looks even more foolish if the stock is at the high end 6 quarters from now.

Why that's a bad idea: You can't time the market. Yes, you might get more "bang per buck", but there's nothing that says the market won't suddenly take a nosedive for any number of reasons.

 

Also, it creates a "hump" in the valuation that's bound to create volatility, from a hysteresis effect if nothing else. Good for options freaks, not good for long term holders like me. It was all right to do that when AAPL was beaten senseless by shorts and down around $400/share. It was even all right when the shorts started trying to pull AAPL down under $500/share. But what's best for longs is a nice, steady re-inflation of the valuation of AAPL.

 

In the meantime, we're getting decent dividends, which has helped take the sting out of the lousy valuation.

 

Yes, lousy valuation. Apple should be up around a P/E of 20, not down almost to 15. It's got too much on the ball to be valued at half of Google.

post #10 of 56
"During the June quarter, Apple spent $5 billion buying back 58,661 shares at an average price of $85.23."

58,661 (shares) x $85.23 (stock price) = $5,000,000 (million -- not BILLION)

Apple would need to purchase 58,602,906 shares (at $85.23) to reach $5,000,000,000.00.
post #11 of 56

What a crock of sh**!

If you're buying back your own goddamn stock them what the hell are the markets for.

But we all know that market speak is BS!

Stock buy back is a legal loop hole that allows companies to embezzle their company's bank accounts.

post #12 of 56
"During the June quarter, Apple spent $5 billion buying back 58,661 shares at an average price of $85.23."

Wanna check that math?
post #13 of 56
Quote:
Originally Posted by elmoofo View Post

"During the June quarter, Apple spent $5 billion buying back 58,661 shares at an average price of $85.23."

Wanna check that math?

Pretty obvious it had to be 58.661 million shares....

post #14 of 56
Quote:
Originally Posted by maccherry View Post
 

What a crock of sh**!

If you're buying back your own goddamn stock them what the hell are the markets for.

But we all know that market speak is BS!

Stock buy back is a legal loop hole that allows companies to embezzle their company's bank accounts.

 I'm a shareholder, and this is extremely positive for me. Apple saw a great way to invest their excess cash. It happened to be their own stock. And that investment is beneficial to all long term holders of AAPL. Our dividends will increase because the dividend pie gets divided into fewer pieces. This is a genius move on Apple's part. 

post #15 of 56
Since I will never sell my shares, I may be the only person at future stockholder meetings.
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A.k.a. AppleHead on other forums.
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post #16 of 56
Not obvious enough for it to be there, apparently.
post #17 of 56
Quote:
Originally Posted by anantksundaram View Post

I truly wonder if it makes sense to continue with the repurchase program at the current price (= $683.69, pre-split; all-time high is ~$705). It might have made more sense to be a bit more aggressive earlier. 

Given the parity in tax rates for qualified dividends versus capital gains, a special dividend with the remaining, planned $39B (~$6.50 per share) may not be such a bad idea...
A special dividend is a bad idea, because that just gives away the companies money for no benefit for future and past share holders. That's the kind of thing you do when the company is about to implode. Same with buying back stock. Buying it back for any reason other than to take advantage of foolish bears trying to push down the stock is just foolish. Over time the stock dilutes because of stock options that vest, and when those are sold, they end up back in the common stock pool. Companies that are about to go bankrupt, buy up their own stock as a last ditch effort to not get delisted from their stock market. That's not Apple at all. Carl Ichan was demanding more than 50 billion in stock buybacks and then suddenly those demands disappeared after meeting with Cook. And look at where we are now.
post #18 of 56
Quote:
Originally Posted by Misa View Post

Quote:
Originally Posted by anantksundaram View Post

I truly wonder if it makes sense to continue with the repurchase program at the current price (= $683.69, pre-split; all-time high is ~$705). It might have made more sense to be a bit more aggressive earlier. 

Given the parity in tax rates for qualified dividends versus capital gains, a special dividend with the remaining, planned $39B (~$6.50 per share) may not be such a bad idea...
A special dividend is a bad idea, because that just gives away the companies money for no benefit for future and past share holders. That's the kind of thing you do when the company is about to implode. Same with buying back stock. Buying it back for any reason other than to take advantage of foolish bears trying to push down the stock is just foolish. Over time the stock dilutes because of stock options that vest, and when those are sold, they end up back in the common stock pool. Companies that are about to go bankrupt, buy up their own stock as a last ditch effort to not get delisted from their stock market. That's not Apple at all. Carl Ichan was demanding more than 50 billion in stock buybacks and then suddenly those demands disappeared after meeting with Cook. And look at where we are now.

To be simple and honest about it, your post makes no sense.

(Edited)
post #19 of 56
Quote:
Originally Posted by elmoofo View Post

Not obvious enough for it to be there, apparently.


If you look at the chart (starting with "Shares repurchased . . .) in the main body of the article, it clearly states the the Shares column is in "000s." Typical accounting speak for "Add three zeros to the end of each number in the column." So 58,661 has 000 appended equaling 58,661,000. 

HTH

ciao—◊

post #20 of 56
Quote:
Originally Posted by maccherry View Post

What a crock of sh**!
If you're buying back your own goddamn stock them what the hell are the markets for.
But we all know that market speak is BS!
Stock buy back is a legal loop hole that allows companies to embezzle their company's bank accounts.

You are the crook of s&&&&!

I bet you dont even own a single share of stock.
I own $120k in Apple shares and the buyback is the best thing they could have done.
Please leave this discussion to the professionals and those who know finance.

So far Apple has saved share holders $15 billion with this buyback.
post #21 of 56
Quote:
Originally Posted by Rogifan View Post

So is it a master class or irresponsible? 1confused.gif

Are you kidding.

The buyback has saved shareholders $15 billion so far. Apple was able to buy the stock 30% cheaper than it is now and save on dividends.

This is basic capital allocation.
post #22 of 56
Quote:
Originally Posted by anantksundaram View Post

To be simple and honest about it, your post makes no sense.

(Edited)

Go research buybacks if you dont understand.
See what Warren Buffet told Steve Jobs years ago.
post #23 of 56
I don't blame Apple for having a stock buyback program and it is not bad business. As a long time investor, I believe AAPL is reasonably priced and I have been adding shares. The only thing that is keeping me from adding more is a % limit I have imposed on any particular stock. One never knows what is going to happen, but I have faith in Apple management and its employees. I lack faith in Wall Street. WS runs a shell game at best. Past performance is no indication of future performance, but you have to admit they have a lot of $'s.
post #24 of 56
Quote:
Originally Posted by anantksundaram View Post

I truly wonder if it makes sense to continue with the repurchase program at the current price (= $683.69, pre-split; all-time high is ~$705). It might have made more sense to be a bit more aggressive earlier. 

Given the parity in tax rates for qualified dividends versus capital gains, a special dividend with the remaining, planned $39B (~$6.50 per share) may not be such a bad idea...

Dividends are a taxable event to shareholders. Buybacks are not.

Apple more than anyone on the entire planet knows exactly what the fair value of the company is. I have full trust in there timing for making buybacks. They alone know whats in the pipeline for the next 5 years and we dont.
post #25 of 56
Quote:
Originally Posted by AceGreen View Post

"Apple spent $5 billion buying back 58,661 shares at an average price of $85.23"

That would be 5 Million worth.

 

 

Quote:
Originally Posted by Quazze View Post

"During the June quarter, Apple spent $5 billion buying back 58,661 shares at an average price of $85.23."

58,661 (shares) x $85.23 (stock price) = $5,000,000 (million -- not BILLION)

Apple would need to purchase 58,602,906 shares (at $85.23) to reach $5,000,000,000.00.

 

 

Quote:
Originally Posted by elmoofo View Post

"During the June quarter, Apple spent $5 billion buying back 58,661 shares at an average price of $85.23."

Wanna check that math?

 

 

"(in thousands)"

 

http://photos.appleinsider.com/AAPL.Q314.buybacks.0072514.png

post #26 of 56
58,661 shares "(in thousands)"
post #27 of 56
Apple's future pipeline should be the major catalyst for buyback timing decisions. That's pretty much it in a nutshell.
post #28 of 56
Quote:
Originally Posted by sog35 View Post

Dividends are a taxable event to shareholders. Buybacks are not.

Apple more than anyone on the entire planet knows exactly what the fair value of the company is. I have full trust in there timing for making buybacks. They alone know whats in the pipeline for the next 5 years and we dont.

 

That's a clueless statement. The aggregate tax consequence (under the current tax law) of spending $39 billion -- assuming the same holding period -- is identical between a repurchase and a dividend. (The clientele may not be the same.) Indeed, if someone taking cash for stock in a repurchase had bought the shares less than a year prior, they would pay taxes at the current (not capital gains) rate, thereby incurring a potentially higher tax bill.

 

All this time, I actually thought that you knew what you were talking about on matters of finance. Sigh.

 

Quote:
Originally Posted by sog35 View Post

Go research buybacks if you dont understand.
See what Warren Buffet told Steve Jobs years ago.

I know the research on buybacks very well. And the evidence amounts to far more than "what Warren Buffet told Steve Jobs" (what was it that he said about repurchases, btw?).

 

I suggest -- fwiw -- that you should be the one to do some research.

 

(Edited slightly).


Edited by anantksundaram - 7/25/14 at 5:37pm
post #29 of 56
Quote:
Originally Posted by anantksundaram View Post

That's a clueless statement. The aggregate tax consequence (under the current tax law) of spending $39 billion -- assuming the same holding period -- is identical between a repurchase and a dividend. (The clientele may not be the same.) Indeed, if someone taking cash for stock in a repurchase had bought the shares less than a year prior, they would pay taxes at the current (not capital gains) rate, thereby incurring a potentially higher tax bill.

All this time, I actually thought that you knew what you were talking about on matters of finance. Sigh.

I know the research on buybacks very well. And it's far more than "what Warren Buffet told Steve Jobs".

I suggest -- fwiw -- that you should be the one to do some research.

I was talking about the tax consequences to the shareholder.

If you dont see the benefit of apple buying back shares at a 30% discount I cant help you.
post #30 of 56
Quote:
Originally Posted by sog35 View Post

I was talking about the tax consequences to the shareholder.

So was I.

 

Seriously, do you think that someone selling their shares back to Apple at a profit does not pay taxes?:???:

post #31 of 56
Quote:
Originally Posted by sog35 View Post
If you dont see the benefit of apple buying back shares at a 30% discount I cant help you.

Um... what "30% discount"? Where did you get that?

post #32 of 56
Quote:
Originally Posted by anantksundaram View Post

Um... what "30% discount"? Where did you get that?

The shares are now $97
They purchased them at an average price of about $68
post #33 of 56
Quote:
Originally Posted by anantksundaram View Post

So was I.

Seriously, do you think that someone selling their shares back to Apple at a profit does not pay taxes?1confused.gif

But they get to choose WHEN to sell.
Personal taxes rates are not static.
A dividend gets taxed in the current year, you have zero choice.

I'd rather let the shareholder decide when the taxable event occurs.
I'd rather recognize the gain when my tax rate is low
post #34 of 56
Quote:
Originally Posted by sog35 View Post

The shares are now $97
They purchased them at an average price of about $68

How would buying back at $97 be a 30% discount? Do you not think there's a difference between buying back at $97 versus $68?!

 

As an aside, I am huge fan of -- and have argued for well over a year, in these forums -- Apple share buybacks. But at a reasonable price. You're welcome to go back and check. I am simply raising some questions, with appropriately worded caveats, about whether it makes sense at $97.

 

Perhaps you should go back and read my original post again, because you seem to have misunderstood.
post #35 of 56
Quote:
Originally Posted by anantksundaram View Post

How would buying back at $97 be a 30% discount? Do you not think there's a difference between buying back at $97 versus $68?!

As an aside, I am huge fan of -- and have argued for well over a year, in these forums -- Apple share buybacks. But at a reasonable price. You're welcome to go back and check. I am simply raising some questions, with appropriately worded caveats, about whether it makes sense at $97.

Perhaps you should go back and read my original post again, because you seem to have misunderstood.

I did misunderstand

IMO $97 is a perfectly good price to buy. Although it might be wiser to buy when the stock dips. My feeling is once it goes over $100 they will defend the $100 mark agressively.

IMO Apple is in the best position to deceide what price to buy since they have the most relevent information and know exactly whats in the pipeline for the next 5 years.
post #36 of 56
Quote:
Originally Posted by Robin Huber View Post

Since I will never sell my shares, I may be the only person at future stockholder meetings.

We'll have a beer then, because I'll be there too with my 7000 shares in tow.

Term. Acquired
Short 06/20/2014 100.000 $97.671 $0.641 $9,767.10 $64.10 0.66% +$619.16 +6.77% $91.48 $9,147.94
Short 06/10/2014 100.000 $97.671 $0.641 $9,767.10 $64.10 0.66% +$399.14 +4.26% $93.68 $9,367.96
Short 05/30/2014 14.000 $97.671 $0.641 $1,367.39 $8.97 0.66% +$93.54 +7.34% $90.99 $1,273.85
Short 05/30/2014 266.000 $97.671 $0.641 $25,980.48 $170.50 0.66% +$1,926.87 +8.01% $90.43 $24,053.62
Short 04/24/2014 420.000 $97.671 $0.641 $41,021.82 $269.22 0.66% +$7,047.87 +20.74% $80.89 $33,973.95
Short 04/21/2014 350.000 $97.671 $0.641 $34,184.85 $224.35 0.66% +$7,891.90 +30.02% $75.12 $26,292.95
Short 04/17/2014 350.000 $97.671 $0.641 $34,184.85 $224.35 0.66% +$7,926.90 +30.19% $75.02 $26,257.95
Short 01/22/2014 70.000 $97.671 $0.641 $6,836.97 $44.87 0.66% +$1,315.52 +23.83% $78.88 $5,521.45
Short 01/09/2014 70.000 $97.671 $0.641 $6,836.97 $44.87 0.66% +$1,463.02 +27.22% $76.77 $5,373.95
Short 12/27/2013 175.000 $97.671 $0.641 $17,092.42 $112.17 0.66% +$3,083.23 +22.01% $80.05 $14,009.20
Short 12/26/2013 175.000 $97.671 $0.641 $17,092.42 $112.17 0.66% +$2,959.98 +20.94% $80.76 $14,132.45
Short 12/24/2013 175.000 $97.671 $0.641 $17,092.42 $112.17 0.66% +$2,836.98 +19.90% $81.46 $14,255.45
Short 12/20/2013 175.000 $97.671 $0.641 $17,092.42 $112.17 0.66% +$3,374.48 +24.60% $78.39 $13,717.95
Short 10/29/2013 700.000 $97.671 $0.641 $68,369.70 $448.70 0.66% +$16,164.76 +30.96% $74.58 $52,204.94
Short 09/11/2013 175.000 $97.671 $0.641 $17,092.42 $112.17 0.66% +$5,433.93 +46.61% $66.62 $11,658.50
Short 09/11/2013 525.000 $97.671 $0.641 $51,277.27 $336.52 0.66% +$16,299.53 +46.60% $66.62 $34,977.75
Short 09/11/2013 700.000 $97.671 $0.641 $68,369.70 $448.70 0.66% +$21,731.75 +46.60% $66.63 $46,637.95
Short 07/26/2013 175.000 $97.671 $0.641 $17,092.42 $112.17 0.66% +$6,059.48 +54.92% $63.05 $11,032.95
Long 07/11/2013 700.000 $97.671 $0.641 $68,369.70 $448.70 0.66% +$25,961.75 +61.22% $60.58 $42,407.95
Long 01/18/2013 175.000 $97.671 $0.641 $17,092.42 $112.17 0.66% +$4,599.48 +36.82% $71.39 $12,492.95
Long 01/17/2013 175.000 $97.671 $0.641 $17,092.42 $112.17 0.66% +$4,497.48 +35.71% $71.97 $12,594.95
Long 01/15/2013 175.000 $97.671 $0.641 $17,092.42 $112.17 0.66% +$4,824.48 +39.33% $70.10 $12,267.95
Long 01/11/2013 175.000 $97.671 $0.641 $17,092.42 $112.17 0.66% +$4,078.50 +31.34% $74.37 $13,013.93
Long 12/13/2011 385.000 $97.671 $0.641 $37,603.33 $246.78 0.66% +$16,241.36 +76.03% $55.49 $21,361.97

Term Acquired
Short 06/23/2014 17.000 $97.671 $0.641 $1,660.40 $10.89 0.66% +$108.35 +6.98% $91.30 $1,552.06
Short 05/15/2014 77.000 $97.671 $0.641 $7,520.66 $49.35 0.66% +$1,028.22 +15.84% $84.32 $6,492.45
Short 05/09/2014 56.000 $97.671 $0.641 $5,469.57 $35.89 0.66% +$802.83 +17.20% $83.33 $4,666.75
Short 09/25/2013 154.000 $97.671 $0.641 $15,041.33 $98.71 0.66% +$4,414.86 +41.55% $69.00 $10,626.47
Long 10/10/2012 196.000 $97.671 $0.641 $19,143.51 $125.63 0.66% +$1,209.41 +6.74% $91.50 $17,934.11
I don't care about what the ignorant masses perceive as truth. I'm concerned with the facts on the ground.
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I don't care about what the ignorant masses perceive as truth. I'm concerned with the facts on the ground.
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post #37 of 56
Apple are genius to have bought back so aggressively over the last several months
post #38 of 56
Quote:
Originally Posted by maccherry View Post
 

What a crock of sh**!

If you're buying back your own goddamn stock them what the hell are the markets for.

But we all know that market speak is BS!

Stock buy back is a legal loop hole that allows companies to embezzle their company's bank accounts.

 

I don't even know what to say about this. You should read more about how the stock market works.

post #39 of 56
Quote:
Originally Posted by anantksundaram View Post

That's a clueless statement. The aggregate tax consequence (under the current tax law) of spending $39 billion -- assuming the same holding period -- is identical between a repurchase and a dividend. (The clientele may not be the same.) Indeed, if someone taking cash for stock in a repurchase had bought the shares less than a year prior, they would pay taxes at the current (not capital gains) rate, thereby incurring a potentially higher tax bill.

All this time, I actually thought that you knew what you were talking about on matters of finance. Sigh.

I know the research on buybacks very well. And the evidence amounts to far more than "what Warren Buffet told Steve Jobs" (what was it that he said about repurchases, btw?).

I suggest -- fwiw -- that you should be the one to do some research.

(Edited slightly).

Who worries about the tax consequences of the idiots who sold the shares the company bought back? That's ridiculous. If you want to sell shares you held less than a year it doesn't matter whether Apple was the buyer or I was. What the seller of bought back shares has to pay in taxes is immaterial to this conversation. It's the tax consequences to ongoing holders of shares that we speak of when we talk about the tax efficiency of a buy back versus a cash dividend.

And what Warren Buffett said to Steve Jobs was that he should buy back shares only if he felt they were undervalued. If Apple feels that its valuation in subsequent years will be sufficiently higher that the shares represent a bargain at current prices, with some margin of error should the future not unfold precisely as expected, then it makes sense from an investment standpoint to buy back shares. And if the dividends paid on shares represent a higher cost than the return the company receives on cash that it's holding, then it makes sense to buy back (I.e., retire) shares from a capital allocation standpoint.
I don't care about what the ignorant masses perceive as truth. I'm concerned with the facts on the ground.
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I don't care about what the ignorant masses perceive as truth. I'm concerned with the facts on the ground.
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post #40 of 56
Quote:
Originally Posted by RadarTheKat View Post


Who worries about the tax consequences of the idiots who sold the shares the company bought back? That's ridiculous. If you want to sell shares you held less than a year it doesn't matter whether Apple was the buyer or I was. What the seller of bought back shares has to pay in taxes is immaterial to this conversation. It's the tax consequences to ongoing holders of shares that we speak of when we talk about the tax efficiency of a buy back versus a cash dividend.

If your investing philosophy is based on the greater fool theory -- to wit, "idiots who sold the shares" -- all I can say is good luck. (Just so you know, there is always a buyer and a seller for every trade, whether that trade happened at $395 or at $705).

Moreover, if you think that everyone who sells their shares back to Apple sells ALL their shares and cease to be 'ongoing holders,', you may even belong to the group that you deride.
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