Apple Inc (AAPL)

He is one of the few people that have been a bear on this stock for a long time. Over the last 3 years, the stock has effectively tripled in revenues so investors have seen a substantial run up in the shares. As a consequence, it has accumulated a ton of capital and is finally returning some of that to shareholders. He questions how you can maintain that kind of momentum. As momentum slowed, institutional investors have sold down. Feels the stock has to go lower before it is really attractive.

Trades at a .68 peg ratio. They have a lot of cash on hand. Seems they are willing to make cheaper phones. Trying to copy what others in the world are doing.

Hasn’t added to his holdings in quite a while. Has some growth issues and margins are probably not sustainable at current levels, but it is so dominant in the industry. You look at what the tablet market is doing to the PC market and that erosion continues. Thinks it is still well-positioned.

(A Top Pick Oct 29/12. 0% Return.) Bull Put Spread. Sold Feb 600 Puts @ $44 and bought Feb 550 Puts @ $22.20. These expired worthless. He was trying to take a bullish position on Apple.

Emotions have taken over. Disconnected from reality. Generating 40 billion in free cash flow. There is more value than the market is ascribing to this stock. We could see it go back to $600. For the next two to three years they are fine.

All the companies in this group are dealing with consumer preferences. She likes the whole smart phone trend. It is tough to bet on one specific company to be the winner. She plays it through QCOM.

Apple (AAPL-Q) versus Google (GOOG-Q)? Thinks you can own both of these. Both are good companies. This one is a battleground stock. They are still the premier player in the space but margins are going to continue to go lower over time as they continue to introduce new products. There is probably a better entry point in the $350 range.

(Market Call Minute.) Reaction to the new phones is fairly disappointing. The difficulty is what to do when you are the biggest company globally. Difficult to see them coming up with any more than incremental changes. If you own, take advantage of the rebound.

Apple (AAPL-Q) or Facebook (FB-Q)? He doesn’t like either one of these. Apple is a great company and has great products, but the stock has fallen so much that investors are selling Short. To drive the revenues higher, they have to come up with a fundamentally new product.

Pays a good dividend, which is sustainable because of the amount of cash that they hold. Product announcements are coming out currently and if you own, you could hold for a while. She has stepped out of the whole hardware device space because there is a lot of change going on and it is getting very competitive.

Not a fan of this company and he would rather be in the parts as opposed to the end company. Doesn’t want to be in the handset business and that is a big part of their business. This is not the “Steve Jobs Apple” and has shown this in the last 2 years. Hasn’t shown any innovation.

Valuation is ridiculously low in terms of a Price to Growth model. Even if you look at 10% growth, which is well below what they’ve generated in earnings growth historically, stock is trading at just over 12X this year’s earnings. If you strip out the cash it’s about 8X this year’s earnings. There has been renewed interest in the last few weeks. Company still has to produce good products which he thinks they do. The days of their innovation are not behind them.

Owned since 2006/7. He trimmed it 7 times. All of the issues of capital allocation policies, buy backs and refreshes of a phone are all incidental. The real future is in innovation, things we have yet to see. That is the thesis that puts him in Apple. They have a good dividend policy as well as aggressive stock buybacks. We have to see in the fall and in 2014 how they do with new products. Great stock for your portfolio.

If you own, you might want to take some profits. The smart phone market is getting pretty fully penetrated, especially the high-end where this company participates. Smart phones is a product cycle driven market.

Thinks this business is all about new product. There is a new iPhone coming out on Sept 10. Their new iPhone was similar to the one before that. When a tech stock starts paying dividends or buying back its own shares, it tells him that that is the best thing they can do with their money. If that’s the case, then the R&D pipeline is maybe kind of bogged down. He believes the stock will be higher 6 months from now and there will probably be more new products before December.