7 Expert Takes on Apple Shares at $500
Opinions from seven investing professionals and Minyanville contributors on Apple's current dip.
By Sean Udall
I think we are seeing one of those "stupid" moments again.
I just noted this link on Apple cutting component orders, and this seems to be causing a bit of panic. But I look at what is already in the stocks and what the other factors are. Notably, where was the stock already trading, and how much business is each of these companies doing with Apple?
I posted a longish note yesterday (subscription to TechStrat required) on Skyworks (NASDAQ:SWKS) and Cirrus Logic (NASDQ:CRUS). I felt a trade was setting up and added some SWKS and could increase that name further. As for CRUS, I don't view this one as an investable name, but it's looking very good as a trade again and I now feel very vindicated for taking my last short-term gain off even though I saw more upside.
Now I see this Qualcomm (NASDAQ:QCOM) selling this morning and once again the "stupid" word rings true. I had felt that QCOM was just on a ride to $70-80 as the growth drivers here had finally become apparent to everyone. And I don't see any notable news to account for this move other than what is the continuing AAPL freak-out fear festival. I'll note that AAPL reducing orders might sound bad, but are those orders being picked up by another supplier?
Bottom line, it feels like we are seeing partial capitulation in the AAPL-related semiconductors, and frankly that makes less sense than the capitulative-type move we have been seeing in AAPL. As stated previously, AAPL is now a fiscal cliff proxy and it's poised for a violent move higher on any deal. However, from a longer-term perspective, I'm thinking the diversified semis, which are also viewed as AAPL foodchain stocks (Broadcom (NASDAQ:BRCM), QCOM, SWKS and Avago Technologies (NASDAQ:AVGO)), are not just poised for a 10-20% bounce, but a much bigger sustained move. This first leg could emanate from a the fact that people will realize AAPL is not dead. But the bigger drivers will be continued strong business from all the other customers and the renewed spending in networking, fiber optics, and storage.
Disclosure: Udall has a position in AAPL.
Sean Udall is an Investment Strategist, Portfolio Manager, and Proprietary Trader with extensive experience across a wide variety of asset classes, including equities, fixed income, currencies and derivatives. He’s a recognized trader, prolific writer, and the founder of the TechStrat Report, a Technology Focused investment newsletter at Minyanville. Read more of Sean's commentary, here.
Five important observations.
By Todd Harrison
1. On a short-term chart, $500 represents the right shoulder of the (potentially negative) head & shoulders pattern we've been flagging for a few weeks (click here to view). Should Newton prevail and gravity take hold, this pattern "works" through a pure technical vacuum to in and around $400ish.
2. On a long-term chart, $500ish represents an uptrend line that's been in place for four years.
I bring this to your attention for two reasons; the level, naturally, is defined, and in the absence of clarity, price points assume added importance for those who look to justify equity movement. will note that even at $500—28% lower than where the stock was a few short months ago—the stock remains 550% higher than it was four years ago.
3. One of our contributors notes that the daily DeMark pattern is triggering a buy signal in Apple. I know Tom DeMark and have tremendous respect for his work, so I would be remiss if I didn't share this fare in the interest of seeing both sides.
4. Finally, and while this is not specific to Apple, although it may well have something to do with the decline, Research In Motion is getting set to unveil its snazzy new BB10 operating system, as previewed in the 'Ville a few months ago.
RIM reports on Thursday, and should the stock gets smacked -- which wouldn't be a shocker given the 130% rally since September (which was when Apple topped, by the way) -- I would be a buyer (at the right price) into the January 30 launch of the new operating system, and perhaps beyond.
Check that chart here; if you believe there are no such things as coincidences, a picture speaks 1,000 words.
5. So, what does this mean for the stock market? A lot, unless we've witnessed a sudden divorce between Apple and the Nasdaq, which would be a massive departure from when Apple was The Most Important Stock in the World.
I've updated the Apple vs. NDX chart below as a graphical representation.
Sir Isaac Newton didn’t earn his reputation as one of the smartest folks in the history of mankind as a function of his handsome looks and chiseled abs. Keep this stock on your radar as it probes $500, and remember that the animal spirits are alive and well as we trickle toward year-end.
Taking profits along the way might work.
By Steve Birenberg
I got caught way long on Apple and stubbornly have held it all the way down. Even today it crossed my mind that it would be down $20 and I could have sold it down $8 easily and bought it back, at least in my hedge fund. I do think Apple faces some challenges that I had underestimated as recently as a few weeks ago. However, I think the selling is way overdone, and I will get a chance to adjust position sizes lower in the $600s soon enough, but it sure does feel like it has to trade in the $400s first.
As a portfolio manager, I have owned Apple since 2005 in the $30s. I’ve trimmed it many times on the way up in my long only accounts including as it got to $100, $200, $300, $400, and $600. It went so fast from the $400s to $700 that I skipped $500!
The winners, 10 baggers, don’t come along that often. And they do sometimes end rudely. I’ve had several in my career, including Westwood One, Cisco Systems (NASDAQ:CSCO), Liberty Media (NASDAQ:LMCA), and Apple. Only Liberty is anywhere near its high and it traded below $3 in 2008! The lesson I take from Apple as a portfolio manager is that it is OK to take profits along the way. It works for me. I suspect that would work for most investors, but especially those managing their own money or handling separately managed accounts for individuals.
Steven Birenberg is president of Northlake Capital Management, an SEC-registered investment advisor utilizing a unique strategy combining index ETFS and media and communications stocks. Birenberg is also co-owner and co-portfolio manager of the Entermedia Funds, long/short equity hedge funds focused on media, entertainment, communications, and related technologies. Read Steve's articles for Minyanville, here.
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