Short Apple Shares

Should you sell your Apple shares?

With shares skyrocketing 30% to record highs in the last quarter of 2010, a total of 22 hedge fund managers with sub 5% stakes sold out of their Apple positions to the tune of over 1.6 million shares.

Is this just a case of taking profits or something worthy of pondering the future of this historically mercurial stock.

Having been around for the inception of the original Macintosh, I have witnessed firsthand the lack of logic and reason which accompanies Apple valuations.

The skyrocket to freefall and back again tendency of Apple shares is the stuff technical analyst dreams are made of.

Perhaps no company I can think of elicits such emotional responses in the minds of its consumers.

Apple fans are notorious for not wanting anything to do with other products.

I recall being given the collective look of disgust by a group of techies not more than a month ago at a local coffee shop. Yep, you guessed...

I was the PC.

The Part That Bothers Me...



Investors were jolted yesterday on news The National Enquirer will soon publish photos of Steve Jobs visiting the Stanford Cancer Center in California. This report comes after Jobs announced in January that he would take an unspecified medical leave of absence, which sparked speculation that Apple's leader is still battling cancer.

Really?

Is Apple that dependent on its founder and CEO to succeed?

Isn't the global brand that is Apple bigger than Jobs?

Is there something else in play that we don't know about?

Markets always tend to pay attention to shake ups at the top...but this seems like an odd reason for such a popular company to be so rapidly sold off by such a concise group of insiders.

Perhaps there is more wrong with the Apple machinery than we know about...
I know that many of you guys on the site are avid IPod/Pad/Phone/Mac daddies, so tell me what you see happening in Apple's future?

As much as it goes against much analytical logic and reason to say it...Apple has always been an identity cult, circling around Jobs and his purported genius.

I expect the company to slowly lose traction in various markets as Jobs' influence subsides. I don't necessarily believe that this will be a result of the lessening quality of Apple products, but an adverse effect of individual branding the likes of which is rarely found in modern business.

Who is with me in saying that Apple is a long term sell?

 

I think Apple has already lost a step in the mobile phone department- Google's Android passed them in market share for new phones delivered last quarter, right? And there a ton of people who only buy iPhones because they are iPhones.

But it doesn't really matter in the short term- like you said, the Apple brand is strong enough that a huge core of people will continue to purchase their products, and ONLY their products. So I'm still bullish on the stock for the time being, although it is a bit troublesome that Jobs' health can move the stock... I think it's too early to make a longer term call, but I'd be interested to hear other people's opinions.

 

I see the rationality behind investors great importance paid to Jobs, remember he was the leader who turned the sinking ship into the most valuable Tech company. I personally worry about them continuing their fantastic earnings. The ipod has already began its decline and should die of in the next 5 years. The IPhone is seeing huge amounts of competition from the Andriod phones. The IPad will also take the same heat once Google's Android 3.0 Honeycomb is put on some attractive tablets. Google will also come out with what is supposed to be the fastest operating system ever which will be built on their chrome, thier laptops will be sleek and should take a chunk out of the Non windows market. In summary I wouldn't short apple now because the Verizon IPhone deal will give them great earnings for the next few quarters, but by the end of the year it may be advantageous to acquire some Put options.

 

What's your horizon for long term? I could see apple correcting with the broader market sometime relatively soon since the index has been pretty overextended...but long term? I dont know. I wouldn't dare call a top, let alone a top on one of the most outperforming names out there.

As far as product, people are going to continue to eat up smartphones, and tablets are exploding.. I just don't see aapl losing market share in any of their product lines when you look at their [absence of] competitors. Overvalued? maybe yes..but consumers are spending and they have a near monopoly on tech's 2 fastest growing segments..

 
nicko.013:
What's your horizon for long term? I could see apple correcting with the broader market sometime relatively soon since the index has been pretty overextended...but long term? I dont know. I wouldn't dare call a top, let alone a top on one of the most outperforming names out there.

As far as product, people are going to continue to eat up smartphones, and tablets are exploding.. I just don't see aapl losing market share in any of their product lines when you look at their [absence of] competitors. Overvalued? maybe yes..but consumers are spending and they have a near monopoly on tech's 2 fastest growing segments..

Competitor = Google. Google products are developing their niche too. While apple may dominate the 1k+ laptops Google will start to make a dent to apples price conscious consumers.
 

Don't really follow the stock much as I'm a pure value guy, but I think investors are right to start panicking with the release of the recent news. Jobs as mentioned above, turned this company around. Furthermore, he is also known to keep a tight grip on all the design/development/marketing decisions. While Tim Cook has headed the ship quite well in the past, he's an operational guy and still had the help of (or orders from?) Jobs with making all the major decisions. With it's sky high valuations, one wrong move can always send a stock like this tumbling down. The absence of Jobs is a real threat to this company and it's future.

 

Here's my biggest problem with Apple -- quality control. They obsess over every little detail pre-launch and do create a great product, but they purposefully leave room for improvement in the upgrades. Google, on the other hand, seems to be much more experimental and is willing to throw their newest technologies and ideas into the consumer market, and they use actual user feedback to guide their developments.

 

You think the valuation is realistic when AAPL is the 2nd largest company by market cap? The whole aapl craze reminds me of tulip craze couple hundred years ago - all about design, aesthetics, and so far away from logic. If AAPL had 80% of the world smartphone market, and could be reasonably expected to remain in that position for the next 10 yrs - then I would say the valuation is right. But now Android is just as good as Apple, and soon there will be many more HTC like companies bringing new smarthphones on market. I don't even think its about Jobs, but that can be a catalyst, Jobs is very instrumental in keeping this craze running. APPL is a good company, but being at 2nd largest by market cap.... come on...

 

While i personally admire Jobs for his lack of true innovation, and ability to steal what others have done, repackage it and sell his Shit as gold. I think over the long term, after his exit from Apple, or this world, the stock could take a tumble. My contention with a firm answer is based on how they've been setting them selves up to be the main distributor of media going forward.

Tablets and Mobile are going to be the way we consume media. Apple dominates this market with the Iphone and IPAD, they have the first movers advantage and no one has been able to combat that yet. Along those same lines Apple has a near monopoly on the production capacity of high quality touch screens, they control nearly 70% of the capacity, making it nearly impossible for others to ship large quantities of product without HUGE sunk costs. Finally recently Apple announced a near "revenue share" (apple gets 30% of all rev) for all subscription based media being distributed through Itunes or an App on an Apple product. This new deal while potentially unfair to publishers, will make Apple BILLIONS. Many publishers have already started creating versions of their product for the ipad (The daily, WSJ, Conde Nast). This will also lower the barriers for entry to media, so you can have more upstart magazines.

So while i do think it's possible to see a drop in the stock if Jobs goes bye bye soon. If Apple can set it self up to be the main distributer of content and continue to dominate mobile and tablets, the stock will only go up. Think how large the magazine subscription market is, and that Apple will essentially get 30% of that off the top....I know its a very assumption filled analysis but without writing a book, i think its a decent view.

 
UBmonkey:
While i personally admire Jobs for his lack of true innovation, and ability to steal what others have done, repackage it and sell his Shit as gold. I think over the long term, after his exit from Apple, or this world, the stock could take a tumble. My contention with a firm answer is based on how they've been setting them selves up to be the main distributor of media going forward.

Tablets and Mobile are going to be the way we consume media. Apple dominates this market with the Iphone and IPAD, they have the first movers advantage and no one has been able to combat that yet. Along those same lines Apple has a near monopoly on the production capacity of high quality touch screens, they control nearly 70% of the capacity, making it nearly impossible for others to ship large quantities of product without HUGE sunk costs. Finally recently Apple announced a near "revenue share" (apple gets 30% of all rev) for all subscription based media being distributed through Itunes or an App on an Apple product. This new deal while potentially unfair to publishers, will make Apple BILLIONS. Many publishers have already started creating versions of their product for the ipad (The daily, WSJ, Conde Nast). This will also lower the barriers for entry to media, so you can have more upstart magazines.

So while i do think it's possible to see a drop in the stock if Jobs goes bye bye soon. If Apple can set it self up to be the main distributer of content and continue to dominate mobile and tablets, the stock will only go up. Think how large the magazine subscription market is, and that Apple will essentially get 30% of that off the top....I know its a very assumption filled analysis but without writing a book, i think its a decent view.

That is a very interesting and valid thought, they could make up from their product shortcomings by turning ito a provider of media. By that accord apples biggest asset is the fact that they have so many products in the hands of people.
 

I will be interested to see how the new iphone (the cheaper smaller, model) works out. Could have a huge effect.

If I had asked people what they wanted, they would have said faster horses - Henry Ford
 

Shorting Apple stock right before summer? LOL

That being said, I've been an Apple product user for 4 years (2 macbooks, 2 iPods, 1 iPhone). I am switching back to PC & changing iPhone for Android this summer.

There is a reason why Google is investing a shitload of $$$ into cloud computing....

2 HPM mini-iPhones will be very sexy. I can see women going nuts over it.

 
dabanobo:
Maybe he should stick to bonds. The Apple revolution is far from over, and the NG price movement is structural, not just noise that will revert.

Edit: also, 100x leverage lol.

"apple revolution"

lol...sent from your iPad?

 
Macro <span class=keyword_link><a href=/resources/skills/trading-investing/arbitrage target=_blank>Arbitrage</a></span>:
I find it amusing that people have been calling the bottom in NatGas since mid 09.

I initially bought Nat Gas in January... got my face ripped off and moved to individual companies such as CHK... got my face ripped off more.

The humility is fine. It is what it is.

 

PE isn't really astronomical on aapl, despite huge per share price. curious why people are short on it? I guess if you think they won't keep flipping iPhones and iPads like they have, but what cause would you have to think that? We're still at the very early stages of corporate adoption in lieu of blackberrys, and China is basically the US 4 years ago in terms of pace of purchase. Seems like they can keep matching or exceeding expectations for at least the next 3-5 years. Contrary thoughts?

 
djfiii:
PE isn't really astronomical on aapl, despite huge per share price.

what's the PE if margins are cut in half?

djfiii:
Seems like they can keep matching or exceeding expectations for at least the next 3-5 years. Contrary thoughts?

this is an equity, not a bond. you need to think about discounting results over a much longer period than 3-5 years.

as "revolutionary" or whatever as apple is, it's still a tech company. think about the long-term history of tech leaders...most of them don't lead for that long on a larger time scale. if you want to narrow it down, think about the leading mobile devices historically (moto startac, nokia 5110 and a billion other models, moto razr, bberry, could throw in palm, etc.).

30%+ EBIT margin for a device maker is pretty sweet. is it sustainable?

 
djfiii:
PE isn't really astronomical on aapl, despite huge per share price. curious why people are short on it? I guess if you think they won't keep flipping iPhones and iPads like they have, but what cause would you have to think that? We're still at the very early stages of corporate adoption in lieu of blackberrys, and China is basically the US 4 years ago in terms of pace of purchase. Seems like they can keep matching or exceeding expectations for at least the next 3-5 years. Contrary thoughts?

of course it doesn't have a high PE. that would indicate future growth. how in the fuck does a 500 billion dollar company grow at almost 20% ad infinitum?

 

I think that Apple is going to disappoint on earnings within the next few quarters. It won't have anything to do with slowed growth, but their quarterly guidance has been awful in the past. Analysts shot pretty high for the first quarter this year, but they were STILL killed by Apple's numbers. I think that in August when they announce, analysts will be sure to put up an astronomical number that Apple won't meet. Long term, AAPL is probably a good play, but after two instances of misleading numbers, I think I would short it the day earnings come out.

 
Connor:
I think that Apple is going to disappoint on earnings within the next few quarters. It won't have anything to do with slowed growth, but their quarterly guidance has been awful in the past. Analysts shot pretty high for the first quarter this year, but they were STILL killed by Apple's numbers. I think that in August when they announce, analysts will be sure to put up an astronomical number that Apple won't meet. Long term, AAPL is probably a good play, but after two instances of misleading numbers, I think I would short it the day earnings come out.

It's going to disappoint in the next few quarters because they wont be launching big tings again until the new year - Study their product life cycle.

If you were to short it, it would probably be best to post up a position in the next month/month and a half depending on your comfort zone but why would you bother unless you were hustling puts?

I'm sorry dude but appl's a great long term play (and so is Nat Gas) but they run the entire tech arena right now and will continue to do so for a while.

Long both

 
Ricqles:
i dont think anything on the market now actually allows you to long nat gas and just put it there. Anyone found a product that you can invest in natural gas with?
Going long E&P companies gives you an investment that is highly correlated to the price of nat gas. In fact, at some low levels of gas prices, produces will find some of their rigs to be unprofitable and will have to reduce rig count causing negative revenue growth. The way to play E&P as a contrarian is to look for a bottom in rig counts.
 
Ricqles:
i dont think anything on the market now actually allows you to long nat gas and just put it there. Anyone found a product that you can invest in natural gas with?

You would have to keep rolling the front-months, or try to find some exposure in the equity market I guess. Holding NG outrights in this situation is a scary prospect...hence, enormous balls.

 

Let me put my two cents here...There will be some decline in price of natural gas..but with time it will go up...there will be huge increase in LNG export...Countries like UAE : The United Arab Emirates (UAE) is an interesting case.

Growth has created demand for water that is 100 times greater than its natural fresh water supply. The UAE desalinates water using natural gas plants.

According to the CIA World Fact Book, natural gas production in 2006 in the UAE was estimated at 48.79 billion cubic feet and domestic consumption in the UAE was estimated at 88% of that amount or 43.11 billion cubic feet. A mere 6.8 billion cubic feet is available for export or for domestic growth.

The country actually imported an additional 1.3 billion cubic feet of natural gas the same year. At the current rate of production and growth, the country’s known reserves of natural gas will be gone in about 60 years. ..

Demand for electricity in the UAE is currently about 15 GWe, but is projected to nearly triple in just 12 years. Natural gas is the fuel of choice for peak power and half of base load demand in the UAE. Oil provides the rest.

UAE is trying to work with Nuclear fuel but after japan incident they are slow and trying to avoid it.....

Negative points can be : warm temperatures contributed to much less demand for heating so I think some modeling can be perform using Global warming as one of the parameter....Less cold less demand for heat in cold countries

 

A long-term bet in gas would have to be made through a basket of gas-focused E&Ps. The problem is that gas E&Ps aren't that cheap yet, they are still pricing in a $4.50 long-term strip. When you see gas E&Ps (the ones that have any cash left) buying back their own shares instead of spending it on drilling/completions is when you know the bottom is near.

In the near term, there will likely be more pain. The US has somewhere between 4.1-4.4 Tcf of storage capacity, depending on your assumptions. Things are getting tight. Production growth continues, albeit at a slower rate. Oily plays will continue to bring on more unwanted gas, and infrastructure is getting built to capture it. At some point, the decline curve of all these wells will catch up to the slowing production growth, but that day has not arrived yet.

 
macro:
A long-term bet in gas would have to be made through a basket of gas-focused E&Ps. The problem is that gas E&Ps aren't that cheap yet, they are still pricing in a $4.50 long-term strip. When you see gas E&Ps (the ones that have any cash left) buying back their own shares instead of spending it on drilling/completions is when you know the bottom is near.

In the near term, there will likely be more pain. The US has somewhere between 4.1-4.4 Tcf of storage capacity, depending on your assumptions. Things are getting tight. Production growth continues, albeit at a slower rate. Oily plays will continue to bring on more unwanted gas, and infrastructure is getting built to capture it. At some point, the decline curve of all these wells will catch up to the slowing production growth, but that day has not arrived yet.

What about CHK? Aubrey McClendon has made sure their share price is cheap. Long term, I have them overweight.
 
Cartwright:
CHK is Enron part duex.

Nat gas was 1.00 in the early 90's and I think it comes closer that than it does to 3 in the foreseeable future.

The two companies are not even comparable. Chesapeake will neither be bought or go under. I'm willing to bet you 1.1k and use my stock in the company as collateral.
 
Cartwright:
CHK is Enron part duex.

Nat gas was 1.00 in the early 90's and I think it comes closer that than it does to 3 in the foreseeable future.

you may want to see EIA (Energy Price Projection) price projections for natural gas in 2011 ...which shows the cost of Natural gas will increase..but they have their own flaws too...but in long term price should go up

Can i load a image or graph here ?

 

I'm speaking ethically, junior. Heard way too many anecdotes...with Aubrey's latest pr fuckup the most benign of stories. I see a Shell-style restatement in their future.

It physically pains me to see "I'll bet ya!"...in type over the internet.... by an undergrad in Michigan... who needs stock as collateral to cover a grand...with 100 bucks tacked for reasons only you could understand.

 
Cartwright:
I'm speaking ethically, junior. Heard way too many anecdotes...with Aubrey's latest pr fuckup the most benign of stories. I see a Shell-style restatement in their future.

It physically pains me to see "I'll bet ya!"...in type over the internet.... by an undergrad in Michigan... who needs stock as collateral to cover a grand...with 100 bucks tacked for reasons only you could understand.

You didn't get that I was referring to Aubrey's $1.1B bet using his wells as collateral, but whatever..
 
PetEng:
If EIA could project pricing info they wouldn't be EIA - they'd be a hedge fund. They're guessing like everyone else.

As I said, they have done mistakes..they consider many fields of tight shale as production fields but technology is still missing to get that kind of gas out....moreover the EIA does not have a good track record of foreseeing changes before they happen...But, I was just giving a support to my statement by giving EIA numbers.

Outlook energy released by Exxon, It estimates that worldwide electricity demand will increase 80% by 2040. Amount of electricity will be generated by natural gas, will pass coal as the world's second-largest fuel source, behind crude oil, by 2025.

Long term prespective :Exxon has a $15.7 billion LNG project in Papua New Guinea that will begin supplying gas in 2014 to customers in Asia. Exxon and Chevron hasJV on $37 billion Gorgon LNG project in Australia.

But, companies are trying to control the prices on short term....how :

Production of gas has a very high decline rate, this means that there is need of continous drilling for maintaining the current supply of gas. Year 2001 data sugget US natural gas decline rate is 23%.. when total consumption was 54 Bcf/d, so there is a annual replacement of 12 Bcf/d. Today declining rate is 32%,,,,24 Bcf/d is needed as a annual replacement.

Around $22 billion per quarter is needed to maintain domestic gas supply based on analysis of the 34 top U.S. publicly traded producers. Cash flow for those companies is $12 billion per quarter, there is $10 billion quarterly cash flow deficit . The important factor here is that on a whole there are no retained earnings, and historically growth stems from retained earnings. Without retained earnings, companies must borrow money or sell assets into joint venture agreements to raise cash in order to drill.

While the continued drilling has been funded by debt so there is lot more share offerings and joint venture agreements this kind of behaviou ris unsustainable looking at the present steep decline in prices

Drilling, therefore, must decrease in order to shrink the present over-supply and so that prices can rise. So most of companies like chesapeake energy cut back on production. Companies like ENCANA in canada are not doing well due to low gas prices.....they already cut down the production ....Devon shut down its drilling for gas in US so probability is high for increase in nat. gas prices ...

 
energyanalyst:
Right, Here i come US .........Yeah :)...Jokes apart, Do you think...some one like me can get in oil and gas Finance consultancy. ..without MBA......
With extensive networking. You should work at a L/S energy HF though.
 

when you're master of the universe u don't get margin calls...but yeah seems aggressive.

re: AAPL being a device company whenever I make the long pitch these days I say it's a software company...the iOS is the key...its a platform across Iphone / Ipad and soon the iTV.

Differentiation at the hardware level in the consumer market is impossible (and so is a real competitive moat)...software level is different look at Google or Facebook. And in terms of consumer brands forget it....NKE/KO/LULU....a lot of magic can come from ppl wanting to affiliate with a certain lifestyle or perceived lifestyle

AAPL is not only a software company, it is a seminal brand (nothing to do with semen). It's aspirational, and in the emerging markets this will allow them to defend their high price point like any luxury good...the pric epoint is half of the point anyway....look at how Coach Ralph Lauren Prada LV are doing in China. As long as ppl are selling Kidneys in CHina to pay for an iphone and ipad, this short will not work. As long as you are fighting quarterly 10 - 20% EPS revisions the short will not work. As long as AAPL is driving from 10% market penetration or sub 10% penetration towards 20 - 30% share the short will not work. As long as AAPL has markets they can still penetrate they have not entered (Television) the short will not work.

The thing is, a lot of this will play out very rapidly and then the short may work, but you will be shorting from a 1 - 1.5 trillion cap so the 100% leverage will leave you in the hole quite quickly.

 
secretariat:
re: AAPL being a device company whenever I make the long pitch these days I say it's a software company...the iOS is the key...its a platform across Iphone / Ipad and soon the iTV.

this to me is your most compelling argument. i was actually going to caveat what i said with the thought that maybe you don't view it as just a device company (i've posted on apple before and mentioned this). i still don't know if i buy it, though, and it's hard for me to overlook the long term history of tech device/mobile phone leaders.

i agree that apple is an aspiration brand, but i think that holds less water when you're talking about more of a high tech device. there's no tech innovation some apparel company can make to a polo shirt that's going to make you buy that polo over a Ralph Lauren polo. i think the actual tech is more important for mobile devices. i still agree that apple has huge brand cachet, but i don't think that's as enduring in this arena.

i think the whole iTV speculation is exactly that...speculation. could go either way for them in terms of creating shareholder value.

apple's actually one of my largest holdings. i definitely wouldn't short it. just trying to figure out if i really want to continue holding it. i have no doubt they're going to keep selling phones/tablets like hot cakes over the near term. intrinsic value needs to price in long term, though (the guys talking about 3-5 years or whatever are just momentum investing).

 

There are few more reasons, I think Gas price will go up :

  1. In February 2012, during a period of extremely cold weather across Russia and large parts of Europe, Gazprom failed to supply all the gas that was requested from it by its non-CIS customers in countries ranging from Poland in the north to Italy and Greece in the south of Europe. This situation led to concerns over a gas shortage.

  2. China is putting lot of investment for development of its natural gas resources, It should able to develop ful fledge production by 2020....but it already started putting infrastruture in to use this energy so for now it should depend on import. Chevron, shell,stat oil, BP almost all major r putting lot of investment in for development of shale resources....numbers can be checked on CNPC website.....CNPC is china national oil company/..

PS: I will be putting all my comment together on my blog :)....abt my views on natural gas..Hope WSO people wont mind..

 

I like how he's bullish on nat gas... but shorting AAPL... come on man it still has a ways to go if you ask me the P/E ratio is still good relative to the rest of the NASDAQ

"Well, you know, I was a human being before I became a businessman." -- George Soros
 
Sohaiyb Soliman:
I like how he's bullish on nat gas... but shorting AAPL... come on man it still has a ways to go if you ask me the P/E ratio is still good relative to the rest of the NASDAQ
PEG ratio is where you want to be looking, and I agree AAPL is quite undervalued.
 
mb666:
Goddamn after-hours in CHK. The entire gap is going to be filled on the open.
Yeah, it's fucking bullshit. It's all psychology and trading with the market trend. I mean everybody and their sister knew that earnings would hit the shits after prices fell off a cliff and production was cut. I predict 5 years from now CHK will trade ~$50. I drown out the hippies calling for solar energy, and I listen to T. Boon Pickens and Carl Icahn. However, I am still keeping one thing in mind... The market can remain irrational longer than I can stay solvent.
 
Tupac:
every fucking college kid wont shut the fuck up about the p/e ratio. since when has that been the determining factor in a good, compelling stock pick?
Take it with a grain of salt. People reiterate what they hear others saying when they don't know exactly how P/E can be useful.
 
Tupac:
every fucking college kid wont shut the fuck up about the p/e ratio. since when has that been the determining factor in a good, compelling stock pick?

...lol

"Well, you know, I was a human being before I became a businessman." -- George Soros
 

I will say its good time to buy some CHK.......specially after this news on WSJ..CHK is trading on 17.01 today..it will go up eventually....

"The Dow Jones Industrial Average lost 78 points, or 0.6%, to 13202 in Wednesday morning trading. The Standard & Poor's 500-stock index gave up 11 points, or 0.8%, to 1395, while the Nasdaq Composite dropped 16 points, or 0.5%, to 3035.

Leading the losses were energy and financials stocks such as Bank of America and J.P. Morgan Chase . Alcoa led the Dow decliners, while Chevron and Exxon Mobil also fell."

 

Some one message me important aspect about new discovries for NG and how it willl make High supply for a low demand.....eventually rates will go down...I posting my reply, so that i can get people view on my reply

1.If you have a well with an initial production rate of 1,000 bpd and a decline rate of 80% per year, after 1 year it will be producing 200 bpd, after 2 years it will be producing 40 bpd, after 3 years it will be producing 8 bpd, after 4 years it will be producing 1.6 bpd, and after 5 years it will be producing 1/3 bpd. So, they need to keep drilling well for present demand. And, As you know because of price of gas too low, its not profitable for companies to drill any more...so most of the projects are abandond to control the price of NG. But, in long term I guess it will be atleast better than what we are getting now....

  1. China is increasing focus on moving to NG due to its concern over environmental conditions. ...Though it has some reserves but they are not easy to explore...There are atleast 7 projects I know which are currently going in china as JV between National Oil and Fortune 500 companies... Right now china has 5 LNG terminals, 7 0r 8 under construction, 6 are approved.....China is expecting 60 Billion cubic meter per year of gas from these terminals....2015...they need 250 Billion cubic meter of gas....If i am not wrong Five year plan says 2015-2020 they need 400 Billion cubic meter per year....and they want to produce 80 Bcm/yr by 2020 which is unrealitic...because of water required for shale gas production and many more reasons...so they still need to depend on the import...Also, Royal Dutch Shell says it has signed a deal with China National Petroleum Corp. to seek, develop and produce shale gas. production sharing contract is the first signed with China to exploit shale gas and covers a 3,500 square kilometer (1,350 square mile) region of the Sichuan Basin.,,which proves demand for natural gas...also you cant ignore UAE which is struggling to get cheap NG....

Thanks

E

 
energyanalyst:
ha ha........I think ur ignoring the fact gas wont be trapped, it will leak out......
That's dependent on the reservoir. With the massive spread between spot and 2013 prices you could make serious cash on this strategy if you were ready to go right now.

The problems are operational. Very few fields are setup to reinject as much gas required to make serious money with this strategy.

 
energyanalyst:
This artcile is worth a read http://fuelfix.com/blog/2012/05/02/gas-drilling-slows-heating-up-prices/

Specially for u conor...:)......

This is really nothing new, but I'm actually surprised about how long it took for the slowed production to have an affect on prices. I read an article in The Economist or Businessweek about how Exxon was getting fucked by their acquisition of XTO back in late 2009. I'm just praying for a May blizzard haha.
 

CHK share bear or bull for short term largly depend upon the outcome of cirminal investigation for its CEO. There will be up and down as this investigation progress.

I have few questions...

  1. How company can get effected from Bulk selling ?
  2. Is there any example of bulk selling from past?

Any article on this will be appreciated...

Thanks

 

This article was on Market watch.com ...There is Dip in most of energy stocks today....Interesting news on CHK..

Chesapeake Energy Corporation /quotes/zigman/126832/quotes/nls/chk CHK -2.70% : For the first quarter of 2012, Chesapeake Energy Corporation /quotes/zigman/126832/quotes/nls/chk CHK -2.70% reported its daily production was averaged 3.658 bcfe, up 18% from the average 3.107 bcfe produced per day in the same quarter last year. By market close, Chesapeake Energy shares climbed 1.16% to US$17.39 on over 34.24 million shares, above its average volume of 30.47million. The stock has been moving within a range of US$16.70 - US$35.75 over the past 52 weeks. Are insiders starting to take huge profits by selling shares or exercising stock options? Academic studies have shown that insiders traditionally make higher investment returns than ordinary investors. Want to find out how they do it?

Read Full Report: http://www.insiderslab.com/PR3/050712A/CHK/ChesapeakeEnergy.pdf

I am interested in reading above report, if any one of u get access to it ..drop me a message

 
Best Response

Coming from a deep value guy, I think apple is a GREAT company, but I would never buy it. I would also not short it though.

I think the thing that people really fail to understand is that apple has almost zero economic moat. I mean think about it. To be successful, apple has to come out with a new and amazing product every 1-2 years in all of its product categories. There are almost no switching costs. Are ipods the best music player? Yes, but if google came out with a better one there would be no switching cost to going over.

So why has apple done so well? Well they simply have continued to develop the best new products over and over again. And most importantly-I AM NOT SAYING that they won't continue to do this. What I am saying, however, is not to confuse their amazing product development ability with an economic moat-they do not have one.

At this valuation I would not buy it-because it assumes that they will continue to churn out quality products. Yes, they probably will continue to do this and I'm sure their stock will do great, but I do not see a margin of safety with no moat. I think it's about having discipline and I don't think an apple purchase at this valuation shows this. But yes- would not short either ha.

 
makers mark:

I think the thing that people really fail to understand is that apple has almost zero economic moat. I mean think about it. To be successful, apple has to come out with a new and amazing product every 1-2 years in all of its product categories. There are almost no switching costs. Are ipods the best music player? Yes, but if google came out with a better one there would be no switching cost to going over.

Well put. Love Maker's, btw. SB+1.

 
makers mark:
Coming from a deep value guy, I think apple is a GREAT company, but I would never buy it. I would also not short it though.

...

So why has apple done so well? Well they simply have continued to develop the best new products over and over again. And most importantly-I AM NOT SAYING that they won't continue to do this. What I am saying, however, is not to confuse their amazing product development ability with an economic moat-they do not have one.

...

+1

The Phantom:
... 2 HPM mini-iPhones will be very sexy. I can see women going nuts over it.

what's a HPM? happypantsmcgee version?

 

And just to clarify- Apple has had amazing returns on capital and their current multiple suggests this will continue into the future. But since they operate in an amazingly competitive industry with no moat and lower barriers to entry than people realize (look at all those tablets!), there is nothing to suggest other than product development skill that their competitors won't increase competition and drive down their return on capital. I'd suggest reading Greenwald.

 

Interesting perspective makers. My view is that Apple has some economic moat from their brand that is associated with reliability and ease of use. For the majority of people who are not tech-savvy, they rely on this to guide their purchasing decisions and see Apple as being the premium brand in the personal electronics space. This would provide them with a buffer in the absence of strong product releases for some period of time. Brands take time to be eroded and generally only lose power quickly when associated with safety hazards (think Toyota, Tylenol) or something similar. There are also some switching costs associated with iTunes and its integration with people's music libraries/online purchases. I switched from using iPods for a few years to a Sony player (for higher sound quality) and it was a huge hassle, one that most people would probably balk at.

I would not go long or short, while somewhat overvalued no favorable risk-reward skew exists in either direction.

 

All this talk of Jobs as if he has that much influence over aapl price these days. Most PMs already believe Jobs most probably will NOT be returning to AAPL. Hence they've been buying AAPL already under the assumption Jobs is out. Secondly, as mentioned above by someone, Cook has already proven he has the capability of taking the co in the right direction. Third, its not like their product pipeline (iphone5 (though id guess it will have a different name), ipad2, ipod xx) are already there. Jobs isn't the one thinking of new products all by himself, he has little to no more actual effect on the co besides being the symbol that he is. Finally, from a technical perspective, as we've seen on the day info came out concerning Jobs sudden departure from aapl, the stock dipped and was quickly snatched up at (what im guessing people considered) bargain prices, before going on to make 52s for a few days.

What we saw the last few days in the stock was simply a test of a new high and now a dump back to the 20DMA, maybe we will see a test of the 50DMA - which will be healthy if anything. This should not be a top, because you could have made that case in Jan, as well as in Nov. And look what happened.

In case its not fully clear: http://www.finviz.com/publish/021911/AAPLc1dl0000.png

Am long aapl calls.

 

Good post macro- it's definitely up for debate. I see an economic moat being able to come from three sources and three sources only:

-customer captivity (demand): switching costs, search costs, etc. -supply advantage- priveledged access to resources- patents, copyrights, govt. licenses, etc. -economies of scale

So while you do make a decent case for apple having the first advantage with some switching costs, I don't see a brand as a sustainable competitive advantage. For example: in the 60s, Mercedez Benz enjoyed very strong returns on capital, and thus had a franchise value (earnings power value above its asset values). But these returns on capital were attractive to other competitors- Acura, Lexus, Infinit, etc. - and they all entered the market and drove down profit margins and returns on capital.

Currently, Mercedez Benz has just as strong of a brand-value (their ability to charge higher prices for their cars) but has been unable to translate this into a franchase value (returns on capital above their cost of capital). Their returns on capital are quite bad actually (before Chrysler merger). What happened? There was nothing to stop another company from also investing money into their brand- commercials, luxury dealerships, technology. etc. - at the same cost of Mercedez.

So while a brand can be powerful in creating value for the product, it doesn't create a moat, barriers to entry, or customer captivity on its own. When analyzing any company with high returns on capital, you have to ask, what makes these returns sustainable from competition? I don't think Apple's brand alone will do this in the long run.

 

Nice job quoting Greenwald. But you forgot the WD-40 example of sunk costs. In order to compete effectively with Apple in hardware you have to take huge losses upfront, as evidenced by past efforts to topple iPod and currently, iPad. You didn't address its supply chain advantage and the huge economies of scale resulting from that. Why are net margins so high?

While Greenwald's framework is great and beats the pants off most valuation methods, it's not perfect. How do Coke and Pepsi fit into his world?

Finally, Apple doesn't need to come close to selling the majority of smart devices to deserve its valuation. I don't even understand why you think the valuation is absurd with a P/E of ~16 net of free cash. That's straight-up cheap even if its margins get challenged.

 

I see a lot of individual investors entering the rising market in the comming year, and they'll want to hitch their wagon to the american company with success and visibility, and one that they understand.

The whole Itunes thing is a cash machine for apple, the hardware is just a delivery medium.

What companies out there deserve a higher market cap? Citi? Some liar bank from China? XOM?

 

Thanks makers.

Midas, I don't know if you read the whole article you posted, but most of the famous players who sold have still kept the majority of their stake. Seems wise to take some money off the table when they've probably made 100+% on Apple. And no mention of David Einhorn a VALUE investor cutting any of his holdings. Article also mentions that Steve Cohen (SAC) added to his position in Apple.

In total, we have 22 completely selling out, 81 trimming vs 30 taking new positions, 63 adding. You have net 3 million shares sold by "hedge funds", which isn't a lot in light of the situation. The Apple short case has some merit, but seems like you didn't read very thoroughly here.

 

Dolore ullam dolor voluptatem voluptatem sed qui. Temporibus ducimus at deserunt molestias voluptatibus magnam molestiae voluptas. Culpa omnis officia voluptatum cupiditate et eius minus. Dicta ex deserunt iure voluptas dicta perspiciatis id. Explicabo ex et repudiandae.

Officiis occaecati iusto consequatur magni expedita laboriosam quas. Aperiam vitae mollitia modi totam.

Quod ipsam maiores esse sed. A distinctio dolorem sit sed velit voluptatem qui.

"The higher up the mountain, the more treacherous the path" -Frank Underwood
 

Modi eveniet sapiente ea aut. Facere velit fugit magni quis. Occaecati aut repellendus perspiciatis neque facere.

Necessitatibus eos dolorem aut fugiat sunt sit pariatur. Vitae reprehenderit ut doloribus consequuntur molestias.

Magni dolor sunt at rerum explicabo. Sit aut dolore labore et. Blanditiis ipsa quisquam reprehenderit doloremque non. Et et cumque itaque est.

 

Nobis amet voluptatem et. Est culpa earum nostrum ea dolorem nobis consequuntur. Et eveniet et est commodi. Et consequuntur iste aut dolores culpa similique. Cum quos voluptatem tempora voluptas. Autem esse nobis fugit iure aut voluptatum.

Omnis eligendi laborum perspiciatis aut quidem beatae corrupti suscipit. Maxime harum asperiores qui adipisci quae sit sit. Earum quis optio ipsum quam quibusdam qui aut repudiandae.

Ut atque harum eaque. Non tenetur qui quos a. Et commodi at molestias.

 

Aspernatur cum velit ab id laboriosam eos. Eligendi ut ut aperiam esse laudantium. Facere assumenda exercitationem eaque id rerum sint. Et sapiente dolores fuga itaque quos voluptas.

Rerum earum modi iusto inventore velit quisquam. Veritatis assumenda facere et laudantium in atque. Et dolores sed quia voluptatem iure.

Unde asperiores quasi maxime aliquid modi culpa libero. Molestiae non voluptas dolorum nemo dolores laudantium reprehenderit.

Voluptas suscipit esse voluptas rem ex ad. Incidunt natus molestiae tenetur saepe. Hic repellat tenetur inventore accusantium qui sequi. Officia aut est cupiditate tenetur.

Career Advancement Opportunities

March 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Goldman Sachs 19 98.8%
  • Harris Williams & Co. (++) 98.3%
  • Lazard Freres 02 97.7%
  • JPMorgan Chase 03 97.1%

Overall Employee Satisfaction

March 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.8%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 03 97.1%

Professional Growth Opportunities

March 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.8%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

March 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (19) $385
  • Associates (86) $261
  • 3rd+ Year Analyst (13) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (66) $168
  • 1st Year Analyst (202) $159
  • Intern/Summer Analyst (144) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
Secyh62's picture
Secyh62
99.0
3
BankonBanking's picture
BankonBanking
99.0
4
Betsy Massar's picture
Betsy Massar
99.0
5
kanon's picture
kanon
98.9
6
dosk17's picture
dosk17
98.9
7
GameTheory's picture
GameTheory
98.9
8
CompBanker's picture
CompBanker
98.9
9
DrApeman's picture
DrApeman
98.9
10
Jamoldo's picture
Jamoldo
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”