If you read the article, he isn't actually predicting a jump in PE. What he's saying mainly is that PE should be discounted for the balance sheet, so it's now "really" closer to 10 today, rather than 17.
I know exactly what he's saying. He's talking about the PE of the operating (non-cash) assets. My question was, what has changed (or will change) about that, and how, with market perceptions? Just the fact that he keeps saying it over and over, with the hope that the "market" will finally pay attention?
Well - Apple started at around 20% in my portfolio - I have sold a pinky finger of my holdings. Not happening here - Carl is right- on way way underpriced.
As far as your comment that you have "made more" .. doubt it .. look at the options that I hold - though I had one painful year $720 or so to $300s .. every $ to me in Apple gain is a very large climb - very low beta to say the least . Absurdly underpriced.
Generally I believe in what you say - not here though.
Disney is similar .. and is huge position.
I like to say - Apple is opportunity of generations .. Disney, Starbucks are light gold /lifetime opportunities
Not at all. The easiest way to get elected and ensure reelection is to hand out goodies (aka benefits) to constituents.
By the same token, the argument goes from a lot of quarters, money wins elections in the US, the rich are able to give politicians more of it so as to increase the likelihood of wins, and have quid-pro-goodies handed out to them (e.g., tax breaks, regulatory loopholes, "corporate welfare").
I am "boastful" to show WHY I am boastful - enthusiastic.
My opinion is that investors have been "insane" not to load up as much as they personally can afford in this company- rather than risky stuff like shake stock, camera on your head - and other garbage.
I am not greedy - so much opportunity for everyone - don't be silly and listen to those taking advantage of you - they don't want you to buy Apple and hold - they don't make money on that strategy
I know exactly what he's saying. He's talking about the PE of the operating (non-cash) assets. My question was, what has changed (or will change) about that, and how, with market perceptions? Just the fact that he keeps saying it over and over, with the hope that the "market" will finally pay attention?
I don't get it.
He's actually talking about the cash assets @ $24.44/share being an effective discount to the current share price. The only way this works though is if Apple uses all of that cash to buy back shares (which is why he also estimates Apple's effective tax rate for repatriation). This is in the complete article, not in AI's summary.
On the second part, I agree. An investor can talk themselves blue in the face about how any given stock is undervalued by the markets, but unless and until the markets agree, they are never going to be right. In Icahn's case however, he's got the gigantic megaphone of being a massively savvy investor. He makes the markets pay attention.
If he's correct then I for one won't be complaining. Better to read someone positive about Apple in the tech media than reading all the doom makers' comments.
I am "boastful" to show WHY I am boastful - enthusiastic.
My opinion is that investors have been "insane" not to load up as much as they personally can afford in this company- rather than risky stuff like shake stock, camera on your head - and other garbage.
I am not greedy - so much opportunity for everyone - don't be silly and listen to those taking advantage of you - they don't want you to buy Apple and hold - they don't make money on that strategy
Please quote the person to whom you are responding. It makes following a conversation clearer.
He's actually talking about the cash assets @ $24.44/share being an effective discount to the current share price. The only way this works though is if Apple uses all of that cash to buy back shares (which is why he also estimates Apple's effective tax rate for repatriation).
You do realize that if all the cash is used to buy back shares, all that is left is the operating assets, right?
Considering that cash produces nearly zero income currently, and all (well, almost all) of the E in thecurrent PE ratio comes from operating assets, what will change once the cash is paid out (and the $24.44 deducted from the share price)? Why would the earnings multiple of the operating assets suddenly jump post-cash?!
If he's correct then I for one won't be complaining. Better to read someone positive about Apple in the tech media than reading all the doom makers' comments.
Bingo. Especially a few years ago when AAPL was being hammered, Icahn was one of the few in the mega-investor class who was talking about Apple positively and making huge investments.
I know exactly what he's saying. He's talking about the PE of the operating (non-cash) assets. My question was, what has changed (or will change) about that, and how, with market perceptions? Just the fact that he keeps saying it over and over, with the hope that the "market" will finally pay attention?
I don't get it.
It's all about perception, and Apple obviously has a long-term perception problem. It's a unique case, so people don't know how to value it (and they haven't since I first bought in, about 13 years ago, which is why I have never been able to sell). Icahn is trying to help get people thinking more deeply about the issue, in the hope that they will be persuaded to see things as he does.
Most of Apple's investors probably don't follow the company nearly as closely as the people who regularly participate in the AI forum. Institutional investors (62% of Apple's shareholders) generally have large, diversified portfolios, and rely on professional analysts to help them make sense of the huge amount of information they are trying to digest. Those analysts are also covering a lot of other companies, and we know how accurate they tend to be with their predictions. I'm guessing that most of the other 38% is people like my friend's mother, who sees Apple doing well in general, so she buys a few shares with her savings, but doesn't really look at things like their ex-cash P/E or valuation of its closest peers (none of which is very similar, of course). Someone like this might also have a few shares of Amazon, which of course is the other end of the spectrum--sky-high valuation with very little profit.
You do realize that if all the cash is used to buy back shares, all that is left is the operating assets, right?
Considering that cash produces nearly zero income currently, and all (well, almost all) of the E in thecurrent PE ratio comes from operating assets, what will change once the cash is paid out (and the $24.44 deducted from the share price)? Why would the earnings multiple of the operating assets suddenly jump post-cash?!
I am not defending his method of calculating the value of the cash to stockholders; I am simply reporting what he is arguing (which AI did not in its summary). In fact I already said that it's bound to be controversial, especially to those who understand what he is saying.
Nothing wrong at all with the rich getting richer as long as the poor don't get poorer. Unless someone else's improvement in well-being makes you envious (even when your own has improved).
Because capital is a social relationship that confers power to its owner, even if the poor do not get poorer in absolute terms but only relative to the rich, they suffer the consolidation of political power by the rich above them. And because profit and wages compete with each other absent technological leaps in productivity (which only provide a short term respite for the first innovator until competition catches up), a more powerful capitalist class translates into more forceful and direct attacks on workers' standards of living, and curtailments of civil liberties as democracy is dismantled by a smaller and smaller elite class that worry about protecting their privileges from democratic resistance.
APPL really is undervalued from a PE perspective. It's trading far lower than it's rivals, even those that have weaker leadership teams and a weaker product pipeline. I suspect that people are afraid to value a company to highly in the absolute sense, i.e. approaching on $1T in worth, even if it's entirely justified in the numbers.
He's the ultimate cheerleader for AAPL (as long as he's not trying to short it), but even he can't seem to move the stock much. It's baffling.
No argument there, but don't forget he's not in it for what the company does (products & the ecosystem) as much as how Apple can use its cash to benefit shareholders. If anything, that money should be going back into the business to build new things or improve what they already have. I also have to pause because most analysts (unlike Icahn) don't get Apple's business model (Being profitable is a good thing) and the "gravitational pull" is large enough that steady growth and profits won't suffice for most people anymore.
See also why people who invest in Amazon are not exactly happy about how their hardware business hasn't taken off. Money went into it, but they got almost no return and the products have been borderline-decent (that's being kind).
As much as I will support Apple as a customer, this is the reason why I'll probably never invest in it. The market is still stuck with the mindset of barely differentiated PC makers who compete tooth-and-nail over every last cent, while making no profit. Just because you can buy a laptop for $300 from Best Buy doesn't mean that it's a good idea.
No one complains when Dell, HP, and Lenovo sell a small mountain of laptops to corporate customers, nobody asks them to find another business where there is more growth.
Quote:
Originally Posted by macinthe408
This guy should be Apple's next CEO. Then again, he's just a Monday morning quarterback who has a lot of money. Guys with a lot of money get to do a lot of things they aren't qualified to do.
For example, the funniness of someone's joke is directly proportional to how much money/power they have? This guy can do a Knock Knock joke and have the room in tears; if Louis C.K. walks in afterwards, it'd be crickets, crickets I tell you!
Next CEO??, Icahn gets financials, he has no clue about Apple's business. Regardless of how large his position is, it's an investment for him, nothing more.
Speaking of "doing things they aren't qualified to do", why on earth does everyone seem to want Apple to build a car? Sure, they've staffed up from Mercedes, Tesla, and the like, but once they get there, the message seems to be, "You're in charge, but you have to start from 0, Good Luck!"
He's the ultimate cheerleader for AAPL (as long as he's not trying to short it), but even he can't seem to move the stock much. It's baffling.
My guess is that the jury is still out on the Apple Watch. While it's sold more that Android Wear combined, it hasn't reached critical mass or shown to be a must have item.
iPhone sales continue to do well, but growth is primarily in China. And China's economy is slowing down.
Brazil and South America might be the next growth market.
It's all about perception, and Apple obviously has a long-term perception problem. It's a unique case, so people don't know how to value it (and they haven't since I first bought in, about 13 years ago, which is why I have never been able to sell). Icahn is trying to help get people thinking more deeply about the issue, in the hope that they will be persuaded to see things as he does.
There is nothing deep about his thinking on the issue. If there is, it is opaque.
I'll ask my question again: what changes the PE ratio of operating assets post-cash? What is your argument?
Add: What I mean by "PE ratio of operating assets post-cash" is the "PE ratio associated with earnings produced by the non-financial -- i.e., operating -- assets." Apologies for the sloppy wording.
Because capital is a social relationship that confers power to its owner, even if the poor do not get poorer in absolute terms but only relative to the rich, they suffer the consolidation of political power by the rich above them. And because profit and wages compete with each other absent technological leaps in productivity (which only provide a short term respite for the first innovator until competition catches up), a more powerful capitalist class translates into more forceful and direct attacks on workers' standards of living, and curtailments of civil liberties as democracy is dismantled by a smaller and smaller elite class that worry about protecting their privileges from democratic resistance.
There is nothing deep about his thinking on the issue. If there is, it is opaque.
I'll ask my question again: what changes the PE ratio of operating assets post-cash? What is your argument?
Your repeated reference to PE ratio of operating assets puzzles me. Assets don't get figured into PE at all. Neither does debt.
Poor wording on my part: what I really mean is "net income generated by Apple's non-financial (or operating) assets". I simply shortened it to "operating assets". My apologies.
Comments
If you read the article, he isn't actually predicting a jump in PE. What he's saying mainly is that PE should be discounted for the balance sheet, so it's now "really" closer to 10 today, rather than 17.
I know exactly what he's saying. He's talking about the PE of the operating (non-cash) assets. My question was, what has changed (or will change) about that, and how, with market perceptions? Just the fact that he keeps saying it over and over, with the hope that the "market" will finally pay attention?
I don't get it.
Well - Apple started at around 20% in my portfolio - I have sold a pinky finger of my holdings. Not happening here - Carl is right- on way way underpriced.
As far as your comment that you have "made more" .. doubt it .. look at the options that I hold - though I had one painful year $720 or so to $300s .. every $ to me in Apple gain is a very large climb - very low beta to say the least . Absurdly underpriced.
Generally I believe in what you say - not here though.
Disney is similar .. and is huge position.
I like to say - Apple is opportunity of generations .. Disney, Starbucks are light gold /lifetime opportunities
Facebook is very special
Not at all. The easiest way to get elected and ensure reelection is to hand out goodies (aka benefits) to constituents.
By the same token, the argument goes from a lot of quarters, money wins elections in the US, the rich are able to give politicians more of it so as to increase the likelihood of wins, and have quid-pro-goodies handed out to them (e.g., tax breaks, regulatory loopholes, "corporate welfare").
See Suddenly Newton above.
I am "boastful" to show WHY I am boastful - enthusiastic.
My opinion is that investors have been "insane" not to load up as much as they personally can afford in this company- rather than risky stuff like shake stock, camera on your head - and other garbage.
I am not greedy - so much opportunity for everyone - don't be silly and listen to those taking advantage of you - they don't want you to buy Apple and hold - they don't make money on that strategy
I know exactly what he's saying. He's talking about the PE of the operating (non-cash) assets. My question was, what has changed (or will change) about that, and how, with market perceptions? Just the fact that he keeps saying it over and over, with the hope that the "market" will finally pay attention?
I don't get it.
He's actually talking about the cash assets @ $24.44/share being an effective discount to the current share price. The only way this works though is if Apple uses all of that cash to buy back shares (which is why he also estimates Apple's effective tax rate for repatriation). This is in the complete article, not in AI's summary.
On the second part, I agree. An investor can talk themselves blue in the face about how any given stock is undervalued by the markets, but unless and until the markets agree, they are never going to be right. In Icahn's case however, he's got the gigantic megaphone of being a massively savvy investor. He makes the markets pay attention.
Please quote the person to whom you are responding. It makes following a conversation clearer.
No one likes a boastful "winner". You should be a bit more modest, although I do appreciate the enthusiasm for Apple.
I like him. He bet on AAPL and is winning. Good for that guy. I am winning too, just not as much. And I hope that he and I continue to do so.
He's actually talking about the cash assets @ $24.44/share being an effective discount to the current share price. The only way this works though is if Apple uses all of that cash to buy back shares (which is why he also estimates Apple's effective tax rate for repatriation).
You do realize that if all the cash is used to buy back shares, all that is left is the operating assets, right?
Considering that cash produces nearly zero income currently, and all (well, almost all) of the E in the current PE ratio comes from operating assets, what will change once the cash is paid out (and the $24.44 deducted from the share price)? Why would the earnings multiple of the operating assets suddenly jump post-cash?!
If he's correct then I for one won't be complaining. Better to read someone positive about Apple in the tech media than reading all the doom makers' comments.
Bingo. Especially a few years ago when AAPL was being hammered, Icahn was one of the few in the mega-investor class who was talking about Apple positively and making huge investments.
I know exactly what he's saying. He's talking about the PE of the operating (non-cash) assets. My question was, what has changed (or will change) about that, and how, with market perceptions? Just the fact that he keeps saying it over and over, with the hope that the "market" will finally pay attention?
I don't get it.
It's all about perception, and Apple obviously has a long-term perception problem. It's a unique case, so people don't know how to value it (and they haven't since I first bought in, about 13 years ago, which is why I have never been able to sell). Icahn is trying to help get people thinking more deeply about the issue, in the hope that they will be persuaded to see things as he does.
Most of Apple's investors probably don't follow the company nearly as closely as the people who regularly participate in the AI forum. Institutional investors (62% of Apple's shareholders) generally have large, diversified portfolios, and rely on professional analysts to help them make sense of the huge amount of information they are trying to digest. Those analysts are also covering a lot of other companies, and we know how accurate they tend to be with their predictions. I'm guessing that most of the other 38% is people like my friend's mother, who sees Apple doing well in general, so she buys a few shares with her savings, but doesn't really look at things like their ex-cash P/E or valuation of its closest peers (none of which is very similar, of course). Someone like this might also have a few shares of Amazon, which of course is the other end of the spectrum--sky-high valuation with very little profit.
You do realize that if all the cash is used to buy back shares, all that is left is the operating assets, right?
Considering that cash produces nearly zero income currently, and all (well, almost all) of the E in the current PE ratio comes from operating assets, what will change once the cash is paid out (and the $24.44 deducted from the share price)? Why would the earnings multiple of the operating assets suddenly jump post-cash?!
I am not defending his method of calculating the value of the cash to stockholders; I am simply reporting what he is arguing (which AI did not in its summary). In fact I already said that it's bound to be controversial, especially to those who understand what he is saying.
Nothing wrong at all with the rich getting richer as long as the poor don't get poorer. Unless someone else's improvement in well-being makes you envious (even when your own has improved).
Because capital is a social relationship that confers power to its owner, even if the poor do not get poorer in absolute terms but only relative to the rich, they suffer the consolidation of political power by the rich above them. And because profit and wages compete with each other absent technological leaps in productivity (which only provide a short term respite for the first innovator until competition catches up), a more powerful capitalist class translates into more forceful and direct attacks on workers' standards of living, and curtailments of civil liberties as democracy is dismantled by a smaller and smaller elite class that worry about protecting their privileges from democratic resistance.
He's the ultimate cheerleader for AAPL (as long as he's not trying to short it), but even he can't seem to move the stock much. It's baffling.
No argument there, but don't forget he's not in it for what the company does (products & the ecosystem) as much as how Apple can use its cash to benefit shareholders. If anything, that money should be going back into the business to build new things or improve what they already have. I also have to pause because most analysts (unlike Icahn) don't get Apple's business model (Being profitable is a good thing) and the "gravitational pull" is large enough that steady growth and profits won't suffice for most people anymore.
See also why people who invest in Amazon are not exactly happy about how their hardware business hasn't taken off. Money went into it, but they got almost no return and the products have been borderline-decent (that's being kind).
As much as I will support Apple as a customer, this is the reason why I'll probably never invest in it. The market is still stuck with the mindset of barely differentiated PC makers who compete tooth-and-nail over every last cent, while making no profit. Just because you can buy a laptop for $300 from Best Buy doesn't mean that it's a good idea.
No one complains when Dell, HP, and Lenovo sell a small mountain of laptops to corporate customers, nobody asks them to find another business where there is more growth.
This guy should be Apple's next CEO. Then again, he's just a Monday morning quarterback who has a lot of money. Guys with a lot of money get to do a lot of things they aren't qualified to do.
For example, the funniness of someone's joke is directly proportional to how much money/power they have? This guy can do a Knock Knock joke and have the room in tears; if Louis C.K. walks in afterwards, it'd be crickets, crickets I tell you!
Next CEO??, Icahn gets financials, he has no clue about Apple's business. Regardless of how large his position is, it's an investment for him, nothing more.
Speaking of "doing things they aren't qualified to do", why on earth does everyone seem to want Apple to build a car? Sure, they've staffed up from Mercedes, Tesla, and the like, but once they get there, the message seems to be, "You're in charge, but you have to start from 0, Good Luck!"
He's the ultimate cheerleader for AAPL (as long as he's not trying to short it), but even he can't seem to move the stock much. It's baffling.
My guess is that the jury is still out on the Apple Watch. While it's sold more that Android Wear combined, it hasn't reached critical mass or shown to be a must have item.
iPhone sales continue to do well, but growth is primarily in China. And China's economy is slowing down.
Brazil and South America might be the next growth market.
It's all about perception, and Apple obviously has a long-term perception problem. It's a unique case, so people don't know how to value it (and they haven't since I first bought in, about 13 years ago, which is why I have never been able to sell). Icahn is trying to help get people thinking more deeply about the issue, in the hope that they will be persuaded to see things as he does.
There is nothing deep about his thinking on the issue. If there is, it is opaque.
I'll ask my question again: what changes the PE ratio of operating assets post-cash? What is your argument?
Add: What I mean by "PE ratio of operating assets post-cash" is the "PE ratio associated with earnings produced by the non-financial -- i.e., operating -- assets." Apologies for the sloppy wording.
Because capital is a social relationship that confers power to its owner, even if the poor do not get poorer in absolute terms but only relative to the rich, they suffer the consolidation of political power by the rich above them. And because profit and wages compete with each other absent technological leaps in productivity (which only provide a short term respite for the first innovator until competition catches up), a more powerful capitalist class translates into more forceful and direct attacks on workers' standards of living, and curtailments of civil liberties as democracy is dismantled by a smaller and smaller elite class that worry about protecting their privileges from democratic resistance.
Ah, someone's been reading his Piketty.....
There is nothing deep about his thinking on the issue. If there is, it is opaque.
I'll ask my question again: what changes the PE ratio of operating assets post-cash? What is your argument?
Your repeated reference to PE ratio of operating assets puzzles me. Assets don't get figured into PE at all. Neither does debt.
There is nothing deep about his thinking on the issue. If there is, it is opaque.
I'll ask my question again: what changes the PE ratio of operating assets post-cash? What is your argument?
Your repeated reference to PE ratio of operating assets puzzles me. Assets don't get figured into PE at all. Neither does debt.
Poor wording on my part: what I really mean is "net income generated by Apple's non-financial (or operating) assets". I simply shortened it to "operating assets". My apologies.
Hope the meaning is clearer now.