Tech fund manager bullish on Apple stock in run-up to iPhone X preorders, but says future ...

Posted:
in AAPL Investors
Apple stock is prime for a rally in the run-up to iPhone X preorders on Oct. 27, even if there are concerns about the phone and the company in the future, according to one prominent investor.




"[Apple] tends to rally into these product launches," AlphaOne Capital Partners founder Dan Niles told CNBC in an interview. He called it a "pretty predictable pattern," arguing that post-launch, Apple stock tends to struggle for about a month. Shares are said to be outperforming even though analysts are cutting their forecasts.

AlphaOne's positive stance is a "short-term view," Niles noted, since there are worries such as the iPhone X's reviews and how many people will be willing to spend upwards of $1,000 on a phone. In the long term it may be better to own stock in the suppliers providing components for the iPhone X's TrueDepth camera, rather than Apple itself, he said.



Niles's opinion has shifted dramatically in the past year. In May 2016 the investor said he was ready to short Apple, given that iPhone sales were down beyond even shrinking smartphone industry trends, and he felt that Apple hadn't "done a whole lot in services," such as a potential streaming TV offering.

Apple is due to announce its September-quarter results on Nov. 2. The timing of this year's iPhone launches means that only the iPhone 8 and 8 Plus will appear in those figures, which may not look good to investors given softer demand than in the past.

Many people may be holding out for the iPhone X, however, in which case December-quarter results could beat expectations and drive up Apple's average selling price. The device will hit shelves and doorsteps on Nov. 3.

Comments

  • Reply 1 of 13
    neilmneilm Posts: 515member
    Wow, the future is uncertain. 

    Just a minute while I pretend to make a note of that.
    lkruppking editor the gratecaliSolidewmejbdragonsuddenly newtonmuadibebrucemcjony0
  • Reply 2 of 13
    lkrupplkrupp Posts: 5,639member
    Let me repeat my constant meme. The stock market runs on two things and only two things... greed and fear. All the financial programs and algorithms that produce trends, predictions, historical analysis are like the palm reader and fortune teller in that tiny storefront at the strip mall. If an investor thinks a company is declining they will sell their stock out of fear. If that same investor thinks a company is firing on all cylinders they will buy the stock out of greed. We see this almost every day with Apple in particular. Some wild rumor about declining sales comes out and AAPL goes down. Some other clown predicts a massive “super cycle” and AAPL goes up. Tuesday we saw Dow Jones release an obviously fake news story about Google buying Apple for $9 billion and that Apple stock holders would get seven shares of GOOG for every share of AAPL. AAPL shot up about $2 before reality set in. That was pure, unadulterated greed my friends.
    jony0
  • Reply 3 of 13
    auxioauxio Posts: 1,758member
    Good thing Apple isn't run by these investors or they would have been dead a long time ago due to uncertainty about the future.

    "The best way to predict the future is to invent it"
    tmaycalijbdragonmuadibe
  • Reply 4 of 13
    I should have been a financial analyst—I just have to be right half the time. 
  • Reply 5 of 13
    tundraboytundraboy Posts: 1,555member
    sog35 said:
    lkrupp said:
    Let me repeat my constant meme. The stock market runs on two things and only two things... greed and fear. All the financial programs and algorithms that produce trends, predictions, historical analysis are like the palm reader and fortune teller in that tiny storefront at the strip mall. If an investor thinks a company is declining they will sell their stock out of fear. If that same investor thinks a company is firing on all cylinders they will buy the stock out of greed. We see this almost every day with Apple in particular. Some wild rumor about declining sales comes out and AAPL goes down. Some other clown predicts a massive “super cycle” and AAPL goes up. Tuesday we saw Dow Jones release an obviously fake news story about Google buying Apple for $9 billion and that Apple stock holders would get seven shares of GOOG for every share of AAPL. AAPL shot up about $2 before reality set in. That was pure, unadulterated greed my friends.
    This is true in the short to medium term.  But in the long term, picking successful companies will lead to greater wealth.

    I can only think of 2 exceptions:  Amazon and Apple.

    IMO, Amazon is ridiculously overpriced and has been for over a decade.  And Apple has been ridiculously underpriced for 95% of the last 10 years.

    My theory is Amazon is propped up by Bezo's Wall Street friends.  While Apple is punished because so many on Main Street own the stock. 

    Its one reason I exited my Apple position earlier this month. Its just not worth the frustration of holding a big position in the company when I know for 95% of the time Wall Street will not value it fairly.
    If a stock is consistently underpriced, but that underpriced price rises as it keeps up with a rising 'true' price, then you still get pretty much the same rate of return on the stock.  Hey, I just described AAPL's price behavior.

    Just because a stock is underpriced, that doesn't automatically mean the rate of return on your investment in the stock will be subpar.  (Especially if it was also underpriced when you bought it.)
  • Reply 6 of 13
    slurpyslurpy Posts: 4,938member
    "Future uncertain" Holy fuck, stop the presses! "Niles's opinion has shifted dramatically in the past year. In May 2016 the investor said he was ready to short Apple," And yet, somehow people stay pay him to listen to his bullshit.
  • Reply 7 of 13
    NY1822NY1822 Posts: 479member
    thank you for including his past calls on Apple in the article....
  • Reply 8 of 13
    NY1822NY1822 Posts: 479member
    Correct me if I'm wrong, but is it only 4 or 5 days worth of sales of the Iphone 8 series included in the upcoming quarter? If sales are lower than expected than Apple's guidance for the upcoming quarter should be greater than expected. (more X sales than expected, as stated in the last paragraph)
    edited October 2017
  • Reply 9 of 13
    tundraboy said:
    sog35 said:
    lkrupp said:
    Let me repeat my constant meme. The stock market runs on two things and only two things... greed and fear. All the financial programs and algorithms that produce trends, predictions, historical analysis are like the palm reader and fortune teller in that tiny storefront at the strip mall. If an investor thinks a company is declining they will sell their stock out of fear. If that same investor thinks a company is firing on all cylinders they will buy the stock out of greed. We see this almost every day with Apple in particular. Some wild rumor about declining sales comes out and AAPL goes down. Some other clown predicts a massive “super cycle” and AAPL goes up. Tuesday we saw Dow Jones release an obviously fake news story about Google buying Apple for $9 billion and that Apple stock holders would get seven shares of GOOG for every share of AAPL. AAPL shot up about $2 before reality set in. That was pure, unadulterated greed my friends.
    This is true in the short to medium term.  But in the long term, picking successful companies will lead to greater wealth.

    I can only think of 2 exceptions:  Amazon and Apple.

    IMO, Amazon is ridiculously overpriced and has been for over a decade.  And Apple has been ridiculously underpriced for 95% of the last 10 years.

    My theory is Amazon is propped up by Bezo's Wall Street friends.  While Apple is punished because so many on Main Street own the stock. 

    Its one reason I exited my Apple position earlier this month. Its just not worth the frustration of holding a big position in the company when I know for 95% of the time Wall Street will not value it fairly.
    If a stock is consistently underpriced, but that underpriced price rises as it keeps up with a rising 'true' price, then you still get pretty much the same rate of return on the stock.  Hey, I just described AAPL's price behavior.

    Just because a stock is underpriced, that doesn't automatically mean the rate of return on your investment in the stock will be subpar.  (Especially if it was also underpriced when you bought it.)
    Yeah this guy doesn’t know what he’s doing, I imagine he believes himself to be a kind of day trader, rather than investing and letting it sit for the long term. 
  • Reply 10 of 13
    Anal-cyst !
  • Reply 11 of 13
    brucemcbrucemc Posts: 1,315member
    Predictions are difficult.

    Especially about the future.
  • Reply 12 of 13
    brucemcbrucemc Posts: 1,315member
    Ok, so I am not an analyst, but if I was one actually looking to provide clients with relevant information, would the analysis not focus on:
    1) Capital return program.

    2) Outlook for the iPhone business over the next 2-5 years.  Is it steady, declining a bit, or growing a bit in terms of units.  Is the installed base still growing.  ASP expectations.  Engagement & relevance.  Leadership in new areas.

    3) How are the iPad and Mac businesses doing - treading water, growing a bit, or declining a bit?  Installed base growth.

    4) New or niche product categories - Apple Watch, AirPods, HomePod.  How are they doing vs. the competition.  What % share in their real target segments (e.g. premium end)?  What are the markets for these products, since they are new.

    5) Services revenue growth.

    6) Apples ability to innovate.  Target new areas.  Deliver.  Ever smaller devices (to target new use cases, like smart glasses).

    The quarter to quarter fluctuations of iPhone sales estimates are irrelevant to how the stock will behave over anything more than the next day.  However, that is all most look at (I guess it lets them produce an "analysis" in about 2 hours of effort).

    Personally, I think Apple will grow over the next 5 years (in terms of top line and profit), but it will be in the single digits per year (on average - some maybe up, some down).  They are clearly leading (in fact getting increasing lead) in silicon for computing devices.  They are leading s/w wise (as it pertains to 'real' products) in areas like biometrics, AR, wearables, photography and video.  I would not say they are far behind in machine learning - they have a very practical, and device centric, approach.



  • Reply 13 of 13
    CNBC - enough said. 
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