While I am generally fine with the idea of buybacks, I have three issues with the timing now:
1) If it involves bringing back the cash stash from abroad, it is tax-inefficient and not worth it;
2) The window for really low-cost debt financing may have passed;
3) I'd have preferred that Apple used up its buyback quota ($36B, I think?) when the stock was trading between $390 and $450 (if necessary, by doubling the amount of debt they issued). At nearly $500 now and with the stock on a likely upward trajectory (I think that sub-$450 days are now gone for good), Apple's going to be able to get back fewer and fewer shares for the money.
Regarding point number 2, Apple cannot and will not "repatriate" that overseas cash. They would be sued.
Regarding point number 2, Apple cannot and will not "repatriate" that overseas cash. They would be sued.
Really? On what basis?
It's Apple's cash to use as the BOD and management team see fit.
Now, they might get asked a lot of questions at the annual meeting and shareholders might even vote for different directors, but I don't see the basis for any lawsuit.
Regarding point number 2, Apple cannot and will not "repatriate" that overseas cash. They would be sued.
Sued? By whom, for what? And using what argument?
Not that Cook would do something like that, but if it's shareholders -- even an Icahn-type -- you had in mind, they cannot second-guess a management decision that abided by standard US corporate governance rules of 'business judgment' (http://lawbrain.com/wiki/Business_Judgment_Rule).
Not that Cook would do something like that, but if it's shareholders -- even an Icahn-type -- you had in mind, they cannot second-guess a management decision that abided by standard US corporate governance rules of 'business judgment' (http://lawbrain.com/wiki/Business_Judgment_Rule).
Apple would be sued by shareholders for using their cash in a "tax-foolish" way. Repatriating the cash would force them to incur a massive hit that they currently avoid. They would be negligent by bringing it back into the US.
Apple has been rudderless and adrift since Tim Cook lost Steve Job's guidance and counsel. Tim Cook can learn sorely needed business and finance lessons conferring with the likes of Carl Icahn. Best news in months! Breaks the monotony of killing time until Apple next scheduled product dump.
Not that Cook would do something like that, but if it's shareholders -- even an Icahn-type -- you had in mind, they cannot second-guess a management decision that abided by standard US corporate governance rules of 'business judgment' (http://lawbrain.com/wiki/Business_Judgment_Rule).
Apple would be sued by shareholders for using their cash in a "tax-foolish" way. Repatriating the cash would force them to incur a massive hit that they currently avoid. They would be negligent by bringing it back into the US.
Woohooooo! All he has to do is quadruple his purchases and he will own 1% of Apple. His position may be large for him, but it represents only a small portion of Apple.
Apple has been rudderless and adrift since Tim Cook lost Steve Job's guidance and counsel. Tim Cook can learn sorely needed business and finance lessons conferring with the likes of Carl Icahn. Best news in months! Breaks the monotony of killing time until Apple next scheduled product dump.
I'm generally guessing, the nature of supply and demand, wouldn't the stock price rise as a result of someone buying that much stock? Of course not by this much (says +22 on the ticker), I think generally people are buying AAPL in anticipation of Sept 10 in hopes to make a quick buck, which they will, and as they sell, the stock price will go down right?
I'm generally guessing, the nature of supply and demand, wouldn't the stock price rise as a result of someone buying that much stock? Of course not by this much (says +22 on the ticker), I think generally people are buying AAPL in anticipation of Sept 10 in hopes to make a quick buck, which they will, and as they sell, the stock price will go down right?
Stop for a minute and think this through. In the last quarter, Apple has bought back $16 billion of its own shares and the market price hardly budged. Icahn's holdings may top $1 billion, according to one estimate aired by Bloomberg. Compared to Apple's repurchase program, Icahn's purchases have about as much effect on supply and demand as an ant crawling up an elephant's leg with rape on its mind. It's Icahn's mouth and reputation driving the jump in today's share price, nothing more.
Apple has been rudderless and adrift since Tim Cook lost Steve Job's guidance and counsel. Tim Cook can learn sorely needed business and finance lessons conferring with the likes of Carl Icahn. Best news in months! Breaks the monotony of killing time until Apple next scheduled product dump.
I'm generally guessing, the nature of supply and demand, wouldn't the stock price rise as a result of someone buying that much stock? Of course not by this much (says +22 on the ticker), I think generally people are buying AAPL in anticipation of Sept 10 in hopes to make a quick buck, which they will, and as they sell, the stock price will go down right?
I think both of your reasons are contributing to the price rise. Also, when a famous 'corporate activist' publicizes taking a large position, it strongly motivates short sellers to buy shares and close out their positions, rather than risk getting steamrolled by a quick change in the psychology of the market with regard to AAPL. There are also a significant number of people who just follow in the wake of people like Icahn and Buffett and imitate their portfolio moves. The volume in AAPL was almost three times normal today. Concerning when or if people will sell, best of luck to anyone who tries to time that event.
Stop for a minute and think this through. In the last quarter, Apple has bought back $16 billion of its own shares and the market price hardly budged. Icahn's holdings may top $1 billion, according to one estimate aired by Bloomberg. Compared to Apple's repurchase program, Icahn's purchases have about as much effect on supply and demand as an ant crawling up an elephant's leg with rape on its mind. It's Icahn's mouth and reputation driving the jump in today's share price, nothing more.
That's largely true. It's mostly about psychology. However, note that there is also a difference in the share purchases in that Apple's shares are being taken out of the market. Icahn's purchases could be sold tomorrow, so they're still marketable shares. Therefore, Apple's share purchases SHOULD have an even larger impact if you look at it purely based on the numbers.
But there's a difference in timing, too. Apple's shares were purchased quietly and presumably a lot of them were purchased while the share price was stagnant or falling. Icahn purchased his when the shares were already climbing - which adds to the impact of his purchase.
All that matters to me is Ichan said Apple was undervalued. He's absolutely correct there. I guess I have a bit more faith in Cook and the board than others do. If Cook was really making decisions based on the stock, based on what Wall Street wants would we have gone almost a year without any new product launches?
No it wouldn't. Apple is obligated to maximize returns for shareholders. Foolishly throwing away money would make them liable.
Yes it would. Management can easily argue that the NPV of what they plan to do with the repatriated funds is greater than the value of the tax loss. You do not and and will not have the ability to second guess that as an investor if Apple's board goes along.
If managers were sued for stuff like this, they will not be able to do a thing. You might as well handcuff them. That's the reason courts won't allow that type of frivolity.
Comments
Quote:
Originally Posted by anantksundaram
While I am generally fine with the idea of buybacks, I have three issues with the timing now:
1) If it involves bringing back the cash stash from abroad, it is tax-inefficient and not worth it;
2) The window for really low-cost debt financing may have passed;
3) I'd have preferred that Apple used up its buyback quota ($36B, I think?) when the stock was trading between $390 and $450 (if necessary, by doubling the amount of debt they issued). At nearly $500 now and with the stock on a likely upward trajectory (I think that sub-$450 days are now gone for good), Apple's going to be able to get back fewer and fewer shares for the money.
Regarding point number 2, Apple cannot and will not "repatriate" that overseas cash. They would be sued.
Really? On what basis?
It's Apple's cash to use as the BOD and management team see fit.
Now, they might get asked a lot of questions at the annual meeting and shareholders might even vote for different directors, but I don't see the basis for any lawsuit.
Quote:
Originally Posted by SpamSandwich
Regarding point number 2, Apple cannot and will not "repatriate" that overseas cash. They would be sued.
Sued? By whom, for what? And using what argument?
Not that Cook would do something like that, but if it's shareholders -- even an Icahn-type -- you had in mind, they cannot second-guess a management decision that abided by standard US corporate governance rules of 'business judgment' (http://lawbrain.com/wiki/Business_Judgment_Rule).
(PS: I think you meant Point #1?)
Quote:
Originally Posted by anantksundaram
Sued? By whom, for what? And using what argument?
Not that Cook would do something like that, but if it's shareholders -- even an Icahn-type -- you had in mind, they cannot second-guess a management decision that abided by standard US corporate governance rules of 'business judgment' (http://lawbrain.com/wiki/Business_Judgment_Rule).
(PS: I think you meant Point #1?)
Yes, I meant point #1.
Apple would be sued by shareholders for using their cash in a "tax-foolish" way. Repatriating the cash would force them to incur a massive hit that they currently avoid. They would be negligent by bringing it back into the US.
Quote:
Originally Posted by Danox
Icahn is a PARASITE! HE IS ALL, THAT IS WRONG IN AMERICAN FINANCIAL BUSINESS TODAY!
"Parasite" or not, he's free to invest wherever he wants! THAT is the nature of business.
https://twitter.com/sarahfrier/status/367362878401024001?source=email_rt_mc_body
Re Icahn's stake above $1bn.
Such a suit would be a non-starter.
Woohooooo! All he has to do is quadruple his purchases and he will own 1% of Apple. His position may be large for him, but it represents only a small portion of Apple.
Groan.....
Quote:
Originally Posted by anantksundaram
Such a suit would be a non-starter.
No it wouldn't. Apple is obligated to maximize returns for shareholders. Foolishly throwing away money would make them liable.
I'm generally guessing, the nature of supply and demand, wouldn't the stock price rise as a result of someone buying that much stock? Of course not by this much (says +22 on the ticker), I think generally people are buying AAPL in anticipation of Sept 10 in hopes to make a quick buck, which they will, and as they sell, the stock price will go down right?
Quote:
Originally Posted by murman
I'm generally guessing, the nature of supply and demand, wouldn't the stock price rise as a result of someone buying that much stock? Of course not by this much (says +22 on the ticker), I think generally people are buying AAPL in anticipation of Sept 10 in hopes to make a quick buck, which they will, and as they sell, the stock price will go down right?
Stop for a minute and think this through. In the last quarter, Apple has bought back $16 billion of its own shares and the market price hardly budged. Icahn's holdings may top $1 billion, according to one estimate aired by Bloomberg. Compared to Apple's repurchase program, Icahn's purchases have about as much effect on supply and demand as an ant crawling up an elephant's leg with rape on its mind. It's Icahn's mouth and reputation driving the jump in today's share price, nothing more.
Originally Posted by MJ Web
Apple has been rudderless and adrift since Tim Cook lost Steve Job's guidance and counsel. Tim Cook can learn sorely needed business and finance lessons conferring with the likes of Carl Icahn. Best news in months! Breaks the monotony of killing time until Apple next scheduled product dump.
MAN that sarcasm is thick. Good one.
I think both of your reasons are contributing to the price rise. Also, when a famous 'corporate activist' publicizes taking a large position, it strongly motivates short sellers to buy shares and close out their positions, rather than risk getting steamrolled by a quick change in the psychology of the market with regard to AAPL. There are also a significant number of people who just follow in the wake of people like Icahn and Buffett and imitate their portfolio moves. The volume in AAPL was almost three times normal today. Concerning when or if people will sell, best of luck to anyone who tries to time that event.
Quote:
Originally Posted by Tallest Skil
MAN that sarcasm is thick. Good one.
Been saving it up for some good news -- as in outside help.For once we can agree.
That's largely true. It's mostly about psychology. However, note that there is also a difference in the share purchases in that Apple's shares are being taken out of the market. Icahn's purchases could be sold tomorrow, so they're still marketable shares. Therefore, Apple's share purchases SHOULD have an even larger impact if you look at it purely based on the numbers.
But there's a difference in timing, too. Apple's shares were purchased quietly and presumably a lot of them were purchased while the share price was stagnant or falling. Icahn purchased his when the shares were already climbing - which adds to the impact of his purchase.
Yes it would. Management can easily argue that the NPV of what they plan to do with the repatriated funds is greater than the value of the tax loss. You do not and and will not have the ability to second guess that as an investor if Apple's board goes along.
If managers were sued for stuff like this, they will not be able to do a thing. You might as well handcuff them. That's the reason courts won't allow that type of frivolity.