Apple Inc (AAPL)

Considers this as “yesterday’s stock”. The day Steve Jobs died, their creativity died as well. The company really hasn’t come up with anything new or exciting. It is more evolutionary than revolutionary. It has tons of cash and will probably raise its dividend.

He tells clients to find an exit. It is a great company but the return on capital peaked at 30%. It is down to 17% now. This is a material change. It is caused by competition. He sees it eroding over time. The iPhone 7 got a mediocre response.

A juggernaut. A name that is interesting and not expensive. There is always a lot of focus on product cycles and what is happening right now. However, if you step back and look at the company, they have a rock solid balance sheet. It has a very high margin services business that is growing behind the scenes, and that is becoming a larger part of the business. They are also getting more active in capital return, which at the right time, can make a lot of sense.

He needs three years of dividend history so he could own this. Tim Cook replaced Steve Jobs 5 years ago. It is the most valuable company in the world. The growth is slowing down however and it breaks a thirteen year streak. He would not buy in anticipation of the iPhone 7 release.

On this one you have to look at the valuation. It is very cheap and trading at 10X earnings. Thinks the bad news is all priced in, and you have to look forward to 2017-2018 when they have new phones. Hopefully they are spending all their money on R&D on new products and new ancillary devices and software that will grow their network.

One of your safety stocks within the technology space. She expects some revenue growth and some increase in the iPhone 7 for this quarter, as well as nice growth in the 4^th quarter in sales. Even though she doesn’t see huge changes, the age of the iPhone is getting old enough that she does see a replacement cycle coming in this year. Also, they have $29 per share in cash, either to pay higher and higher dividends or to do more share repurchases. Dividend yield of 2.14%.

The European commission is saying to the Irish government that they need to go to Apple and get back 13 billion euros in back taxes. This is outrageous. They are really using competition policy to go after this, and essentially their trampling over the sovereignty of Ireland, who can decide what tax rate to achieve. Thinks it is overreaching.

Thinks the bull case for this is that it is cheap and has tons of cash. However, it is hard to see, with 65% of its earnings coming from the iPhone, what is next. It is hard to see how this will grow, as you are not going to get it through iPhone sales or through iPad. A great company with great iconic products, but how do you grow that business?

(Market Call Minute.) Sold his holdings a few weeks ago. With the iPhone being 2/3 of its sales and slowing sales is a bit of a concern for him.

(Top Pick Aug 14/15, Down 5.73%) They are heading into a product refresh cycle. Apple is a different company today. It is more developed today.

It is a cash cow without innovation. They will refresh many of their products. They need to gain traction in emerging markets with their iPhone.

He is constructive on this company. There have been questions on the refresh cycle going forward, but he is comfortable with that. The new phone coming out will be good. If there is not a rush to it, there will be a gradual type of refresh cycle. He is positive on their move to their eco system.

He argues all the time within his company about this. He doesn't like it while others like it because they are such an iconic company. They've been good about product innovation. Expensive considering profit margin. Watch iPhone sales in the fall.

(A Top Pick Sept 3/15. Up 0.58%.) Still owns a modest size position in this. There is a lot of controversy, but at the end of the day, it is a great branded company, and people love their products and continue to buy them. This is trading for less than 10X earnings ex-cash, so is very cheap relative to the market. Has a huge amount of cash on its balance sheet. Over time, there are all kinds of opportunities for the company to get involved in the connected car, software as a service, data storage, etc.

(A Top Pick Sept 22/15. Down 1.63%.) For the last year this has been a value trap. Concerns have been on smart phones and where we are in the cycle for them. Leading experts in the field suggest that the growth is not over, but has been dramatically slowing. Despite this company’s really, really tough problem this year, it has really been more of a comparison, because the prior years’ iPhone cycle was so strong. The new iPhone coming out is not expected to be that exciting. Valuation is so ridiculously cheap. No one ever gives it the value for its $230 billion of cash.