Since84
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To infinity and beyond!
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Post by Since84 on Aug 3, 2017 2:55:04 GMT -8
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Post by macster on Aug 3, 2017 3:23:28 GMT -8
www.inc.com/peter-gasca/this-one-fact-about-apple-will-blow-your-mind.html"This One Detail in Apple's Earnings Report Will Blow Your Mind Apple's fiscal quarterly earnings report was outstanding -- but this one detail was the most impressive. If Apple were to go to an ATM to check its balance, the receipt would say "$261,500,000,000.00." Admittedly, this could be difficult for some to comprehend, so it might help to add a little perspective to just what you could do with $261 billion. If you decide to withdrawal the money from the ATM, with the maximum daily limit of $300, it would take you 2.4 million years to withdrawal it all. If you could withdrawal it all, there would not be enough U.S. 20-dollar bills in circulation to cover your balance. If you spent $1 million every single day, it would take you 716 years to spend it all. Conversely, if you only lived another 50 years, you would need to spend $14.3 million every single day to die with a zero balance. If you had all of the cash in $100 bills, it would take 2,560 crates or pallets, about three feet tall, to store it all. If Apple's cash balance were a measure of gross domestic product (GPD), it would be the 42nd largest country in the world, ahead of Venezuela, Pakistan, Finland, Greece, Portugal, and New Zealand. You could buy every single NFL, MBA, NBA, and NHL team. If you distributed the cash to each person on the planet, everyone would receive $35, which is the equivalent of an eight-hour workday's pay in Czech Republic, Estonia, Lithuania, Latvia, Costa Rica, Slovak Republic, Chile, Colombia, Brazil, Russian Federation, and Mexico. If you just gave the cash to each person in the U.S., everyone would receive $800. If you stacked the money in U.S. one-dollar bills, it would be about 17,300 miles tall, or 70 times higherthan the orbiting International Space Station. If you lined up the money in U.S. one-dollar bills, it would be 24.8 million miles long, or go around the earth roughly 995 times. If you laid out the money in U.S. one-dollar bills as a carpet, it would cover 1,024 square miles, an area roughly the size of Rhode Island. If you stacked the money in U.S. pennies, it would go 25 million miles into space, almost three-quarters of the distance to Mars, and weigh 144 billion tons. If you put 261 billion hamburgers side by side, they would circle the earth 133 times and the remaining stack would reach the moon five times."
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4aapl
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Post by 4aapl on Aug 3, 2017 7:12:17 GMT -8
While an impressive number, Apple has stopped putting their cash & equivalents in their standard press release. They have also done this lately for total profit, only releasing EPS, which helps include the process of their buybacks. But does cash & equivalents matter? Or should it be assets minus liabilities? Or some tailored number between the two, maybe not including property, plant & equipment? For assets minus liabilities, where most of the liabilities are the bonds Apple has taken out, the total is still about $132.5B! www.apple.com/newsroom/pdfs/Q3FY17ConsolidatedFinancialStatements.pdfIt's nice to have cash for certain spending and such, and some of those liabilities can change (I'm guessing taxes to repatriate the cash are in there). But I came across something like this the other day, and it got stuck in my head.
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bud777
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Post by bud777 on Aug 3, 2017 8:13:14 GMT -8
I am not sure how to really evaluate the amount of cash. Back when it was 60 billion and Apple started the buybacks, Cook said, "Obviously, we don't need 60 billion in reserves to run the company", I have to ask myself, what difference does it make to the company if they have 160 billion or 260 billion? What decision would they make differently if they only had 160 billion? The marginal effect of the additional money seems negligible. Economists studying risk aversion often refer to "utility", a measure of what the money is worth to you, rather than the absolute value of the money. If you have $10,000 in savings, you are probably more careful about spending $1000 than you are if you have a billion. I have often wondered how many of our cherished axioms of investing would change if they were evaluated based on utility rather than risk/reward.
Apples ability to generate cash is unprecedented, but I am not sure how to factor it into my thinking about the company. One concern is that, when I look at the total assets and what is being produced by those assets, the cash is actually a drag. Return on assets has dropped from 28% in 2012 to about 14%, Does this matter? I am not sure, but it seems like that money should be working harder.
I feel like the board is following an evolutionary path and there is nothing really wrong with that. The constant improvement to all aspects of R&D, manufacturing and marketing certainly is the hard road to success. I marvel at how well they do it. But with this much cash, I cannot help but wish they were taking a bigger swing. Apple could create worldwide internet connectivity at gigabit rates though low earth satellites and change the world. Sure, they don't need to. It will happen without them, but what if they did?
To me the company feels tentative. Apple has made me a multi-millionaire and I will be forever grateful. I guess I just miss Steve.
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Post by deasys on Aug 3, 2017 8:38:59 GMT -8
I guess I just miss Steve. Cook is doing what Steve would have done. I guess that's not always a good thing…
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4aapl
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Post by 4aapl on Aug 3, 2017 11:28:17 GMT -8
I am not sure how to really evaluate the amount of cash. Back when it was 60 billion and Apple started the buybacks, Cook said, "Obviously, we don't need 60 billion in reserves to run the company", I have to ask myself, what difference does it make to the company if they have 160 billion or 260 billion? What decision would they make differently if they only had 160 billion? The marginal effect of the additional money seems negligible. At some point the marginal effect is negligible, other than having the cash on hand to make any deal at any time. Like Buffet in the great recession, there were some great deals that he was able to make (i.e. that I would have gladly taken), since he had spending money. 132.5B net is quite a lot! But some at Apple, especially SJ, remember/remembered how it was just over 20 years ago when they nearly went under due to lack of cash, and had to get a loan from Microsoft. And SJ had a similar thing when they were blowing through money at Pixar, and then at NeXT. Hmmmm. With OX expected at a little under $7B a quarter, that's 5 years of operating expenses if they stopped making money. Change to a Tesla or (formerly) Amazon method of actually losing money, and it eats away that much faster, even if you are securing marketshare. (huh, I hadn't remembered seeing a negative P/E before (normally it was blank), but that's what Yahoo is showing for Tesla finance.yahoo.com/quote/TSLA?p=TSLA ) But like a recent article pointed out, where "young run money was doing better than old run money" (basically young people that weren't invested during the great recession, and so don't have that shadowy outlook trying to make them less risky), there's times where those with no fear do better....for a while. I guess I just wonder if there will be a backlash (media, or customers) due to excess cash. In that thinking, I understand Apple not listing it (even though they did mention it in the call), but think it might be even better to call out the net total instead. It's a good problem to have, first world problems and all. And I can see them trying to solve a problem, first world or third world, with it....if it fits in with Apple. Buying up sequestered forests and adding solar is doing that. But there are lots of further possibilities, and I'm glad that Apple has some savings to be able to bootstrap anything big that comes along, whether internal or external.
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chinacat
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AAPL Long since 2006
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Post by chinacat on Aug 3, 2017 12:31:59 GMT -8
Good thoughts from both, but I guess that I feel that if Tim and Luca felt the right deal was out there, they would make it. In general, it seems like they favor more focused deals, i.e. key people or small companies, whose value outweighs the size of the acquisition. Beats is the obvious exception, and I guess opinions are mixed on that, although the Services growth certainly can be attributed at least in part to it. On the other hand, the recent hire of Russ Salakhutdinov from Carnegie Mellon as director of artificial intelligence appears to support and drive the bold AR move heralded by ARkit, and seems much more typical of how they work. Now, if some sort of repatriation deal does happen, then it is possible that they could deploy at least part of that pile of gold to make a large acquisition to bolster, for example, Apple Music's streaming business. Bottom line for me is that they will remain focused on what is best for the business, and not necessarily what will satisfy the pundits. It's hard to argue with results so far. Oh...more frequent or larger bumps in the dividend would not break my heart.
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Since84
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To infinity and beyond!
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Post by Since84 on Aug 3, 2017 12:39:07 GMT -8
Personally, I tend view cash, especially stuffed in a mattress, as a wasted asset. It is not earning anything.
I understand the concept of dry powder, particularly for once in a life time opportunities, but this amount is absurd. It would be like maintaining a military prepared to fight several major simultaneous conflicts, particularly when you already spend more than the next 11 biggest guys, together.
There is risk of loss -- most of us would worry about theft or fire, in Apple's case there is potential for confiscatory taxes.
Did I mention it's not earning anything? $261 Billion, not productively deployed.
At least invest in widely traded securities.
*** end rant ***
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chinacat
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AAPL Long since 2006
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Post by chinacat on Aug 3, 2017 12:41:29 GMT -8
Personally, I tend view cash, especially stuffed in a mattress, as a wasted asset. It is not earning anything. I understand the concept of dry powder, particularly for once in a life time opportunities, but this amount is absurd. It would be like maintaining a military prepared to fight several major simultaneous conflicts, particularly when you already spend more than the next 11 biggest guys, together. There is risk of loss -- most of us would worry about theft or fire, in Apple's case there is potential for confiscatory taxes. Did I mention it's not earning anything? $261 Billion, not productively deployed. At least invest in widely traded securities. *** end rant *** Fair enough
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Post by incorrigible on Aug 3, 2017 12:53:47 GMT -8
Personally, I tend view cash, especially stuffed in a mattress, as a wasted asset. It is not earning anything. I understand the concept of dry powder, particularly for once in a life time opportunities, but this amount is absurd. It would be like maintaining a military prepared to fight several major simultaneous conflicts, particularly when you already spend more than the next 11 biggest guys, together. There is risk of loss -- most of us would worry about theft or fire, in Apple's case there is potential for confiscatory taxes. Did I mention it's not earning anything? $261 Billion, not productively deployed. At least invest in widely traded securities. *** end rant *** Well spoken. I agree 100%. It's not their money either. It belongs to the shareholders.
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mark
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Post by mark on Aug 3, 2017 14:00:06 GMT -8
Personally, I tend view cash, especially stuffed in a mattress, as a wasted asset. It is not earning anything. I understand the concept of dry powder, particularly for once in a life time opportunities, but this amount is absurd. It would be like maintaining a military prepared to fight several major simultaneous conflicts, particularly when you already spend more than the next 11 biggest guys, together. There is risk of loss -- most of us would worry about theft or fire, in Apple's case there is potential for confiscatory taxes. Did I mention it's not earning anything? $261 Billion, not productively deployed. Well, this money has to be looked at in 2 ways: 1. The vast majority of it is "stuck" overseas. If it is brought back right now (for anything - to pay dividends, to buy back stock, to buy a big company, whatever), it will be taxed at about 35%. So that implies a return of roughly -35% on that cash if that occurs. Obviously Apple doesn't want to do that, and instead has been borrowing at respectably low interest rates instead (mostly to buy back stock, and since the dividend is close to the interest rate, it's about a wash cash-flow wise). 2. And because of all that borrowing, they don't really have 261B as they "converted" about half of it to the aforementioned debt (solely for financial purposes). I would argue that all that money IS productively deployed, for now at least, because if the tax law changes, it could have an effective net gain of 15-25% (if rates on repatriated cash go down to 10 to 20% instead of the current 35%. At least invest in widely traded securities. What would you suggest? And if those widely traded securities are indeed so good, why don't we all take a portion of our Apple investment and PUT IT INTO those great widely traded securities?
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Post by sponge on Aug 3, 2017 15:38:30 GMT -8
Personally, I tend view cash, especially stuffed in a mattress, as a wasted asset. It is not earning anything. I understand the concept of dry powder, particularly for once in a life time opportunities, but this amount is absurd. It would be like maintaining a military prepared to fight several major simultaneous conflicts, particularly when you already spend more than the next 11 biggest guys, together. There is risk of loss -- most of us would worry about theft or fire, in Apple's case there is potential for confiscatory taxes. Did I mention it's not earning anything? $261 Billion, not productively deployed. At least invest in widely traded securities. *** end rant *** Well spoken. I agree 100%. It's not their money either. It belongs to the shareholders. That is why I think they are simply waiting for tax repatriation to save about $50 Billion in taxes. When they bring it back I expect the mother of all buybacks and large increase in dividend.
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4aapl
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Post by 4aapl on Aug 3, 2017 17:27:46 GMT -8
Personally, I tend view cash, especially stuffed in a mattress, as a wasted asset. It is not earning anything. ... Did I mention it's not earning anything? $261 Billion, not productively deployed. At least invest in widely traded securities. *** end rant *** Why do you think it's not invested in anything, not earning anything? My understanding, while brief but still paying attention due to it's relatively near location and my interest in such, is that Braeburn is investing for them. They're just over the hill, in Reno. Previously on Double Diamond, and maybe now on Kietzke, in Reno. They used to only have 6 people, I'd guess they now have 10-15. While I've looked at a few job listings there, of course they want money management experience. But we have a variety of Hedge funds and Money Managers here in our little town, due to the scenic nature, no income tax, and high property values. I've talked to someone who's gone down there, but I can't exactly pin it on someone. I'd expect it was one of the Money Managers, since they are dealing with trying to make a small amount consistently, rather than a large amount sometimes. Anyways, while the cash might not be making tons of money, I'm pretty sure they're making something on it. But that something it probably just trying to beat inflation. Likewise, I expect that they are likely in the hedging business, as far as against different currencies and possibly even against changes in commodities. I missed the full conference call, but when I was walking back in there was something about that their range was tighter this Q due to hedging. I didn't catch if that was against currencies, or commodities. Either way, Apple is paying nice salaries to some well tenured folks who are actually doing something with the money. Like previously stated, this isn't with young guns trying to double the market, but rather with seasoned pros that have seen ups and downs. While I would love Apple to be making huge gains with that cash instead of it just trying to beat inflation and currency/commodity changes, there are certain things that you get with a seasoned company instead of a small startup. I've worked at a startup, mid-cap, old-cap, government, and Apple. There's big differences between them, when you get down to it. For investing, if you really want more of that crazy growth potential with some downside risk too, just move some percent elsewhere. That's our prerogative...while this time I'm hoping to get some out on the super cycle and move it to other large-caps or old-cap, just to hedge things a little. But my goal is to never have a temporary 85% loss again, which I've taken something like 6 times with AAPL, in order to get this crazy 30000+% gain on those initial shares I bought. Thus, it's time to diversify, at least partly, for more than just real estate. Like Lucky said, thanks AAPL! It's been a great 20 year ride! 4aapl
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4aapl
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Post by 4aapl on Aug 3, 2017 19:14:08 GMT -8
Not that it matters much, but for completion: en.wikipedia.org/wiki/Braeburn_Capitalwww.google.com/maps/place/6900+S+McCarran+Blvd,+Reno,+NV+89509/@39.4766172,-119.8069183,15z/data=!4m5!3m4!1s0x8099406bfafdb765:0x2ffb7bc11b1cc541!8m2!3d39.4758608!4d-119.8067153 So, half a mile from our "local" Sams Club, and next door to our optometrist. Heck, I'd do an "internship" for health insurance and some stock grants, since I don't have the background for a full position (I think the listing I saw wanted someone who had run money for at least 5 years). It's been a couple years since the time I'm guessing I heard of someone talking with them....but I've been out of the loop now that kids are older and go to different schools. Such is life. If anyone really wants more info, I might be able to get it. But really, a far off blurry view of the new main campus from 280 would likely be a lot more interesting than a closeup of the front steps of this place....though there were just huge kick-off celebrations of the housing development behind this building. Free BBQ and hay rides and everything! (didn't make it) Carry on. Nothing really to see here.
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4aapl
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Post by 4aapl on Aug 3, 2017 20:05:48 GMT -8
ok, last post on this tonight, really. Linked in is just fun to look at sometimes, especially when my links from Apple make many of these people 2nd or 3rd connections. Bertrand hasn't responded yet, though.
Yet another SJ, but this time the last name is Johnson. Looks like he was starting as the CIO at Braeburn Capital right while I was taking some time off with my new son:
Chief Investment Officer Company NameBraeburn Capital (Apple Inc.) Dates Employed2007 – 2012 Employment Duration5 yrs LocationReno, Nevada Area • Led a 5-person team in managing Apple’s cash and investments • Led 150 weekly portfolio strategy meetings for the internal portfolio • Conducted 40 annual site visits to managers for the external portfolio • Participated in 350 monthly strategy dial-ins with PMs, analysts, and traders at external managers • While working under the strict guidance of a hands-on executive board, our team grew this wholly owned Apple Inc. subsidiary business from one employee to five employees during a period while assets grew from $13 billion to $113 billion in five years
Just a quick look into what they do. Nothing too exciting. And no open jobs currently listed on jobs.apple.com.
Turns out of the 19 hits, 8 or so look like they are for Braeburn Capital, and I can see details on all but one of them. All I looked at have degrees in Economics or Finance. At least 2 did an internship there, so that actually is/was a possibility. Mayan Atid is still there, and lists "interests" in High Frequency Trading and Behavioural Trading (spelled that way).
A former worker lists for Braeburn experience, "Securities analyst and co-portfolio manager for multi-strategy hedge fund; investment focus on small- and micro-cap equity opportunities"
For comparison, Milko Todorov lists he was at Braeburn for nearly 2 years, but is now in Cupertino for 6, as "Portfolio Manager, Foreign Exchange"
A couple others, and even an "Office Manager", with other administrative jobs since then.
I don't know that that really gives any real info into Braeburn Capital, but I remember reading about the formation way back when on AppleInsider, and wondering about it. Now that it's been a few years, it's still tough to get info, but there's some out there. From what I see, it's not just parking money in a standard MM account, but is likely still separate from any hedging against foreign currencies. At the same time, they have had internships, and it looks like many of the degrees are undergrads, including from Cal Poly (SLO?) and a business degree from UC Berkley. Most are relatively short terms, but that might have something to do with our lovely town of Reno that is just now coming around, while the larger SF Bay Area is close enough and calling.
Anyways, just a little info for anyone who is interested, and maybe a few people to ping if I want to try to open a door for a local gig. Night all.
BTW, weekly options don't look huge, but a pull a little further down to $155 looks easy. Earnings week seems to have a tendency of doing that. I'd guess we'll pass $160 and touch $162 in the next 2 weeks or so, and I really see $175 as being pretty easy on the run up to the new iPhones. Just as 3 months ago, the time here is generally silent, so it's a great time to throw out "rumors" and run the stock down. Personally, $185 is a nice number to me that seems just slightly possible before the announcement. I'm still looking at diversifying a little around that point, on the order of 15-20% due to how accounts are set up and taxes. $185 might be a little too high this time around. Either way, I'd likely also write a few covered calls for making some sales in January.
Just putting it out there. I've vowed to never have another 85% loss, after too many temporary portfolio losses of that magnitude over the past 20 years. And once at least some diversification is done, I can choose to actually calling myself retired if that's what I want.
Thanks AAPL
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Post by rob_london on Aug 3, 2017 23:41:01 GMT -8
Over the past quarter Apple had interest and dividend income of $1.33 billion, before paying interest on debt of $0.6 billion. During the past year Apple the net amount of interest and dividend income from the cash pile and marketable securities is approximately $3.5 billion.
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