CNBC‘s “Fast Money Halftime Report” a short while ago hosted Dan Niles of Alphe One Capital, who has been bearish on Apple (AAPL) for some time now, said that he’s been buying the shares on the company’s having more than doubled its capital return plan on the occasion of its fiscal Q2 report a week ago.
Niles told the program’s Scott Wapner:
We haven’t really liked Apple since the middle of last year when they started missing numbers. The numbers have been consistently coming lower since then. The products aren’t that good, margins are compressing. We started buying AAPL stock day before they reported, and we bought the next three days, bringing us to a full position. It real comes down to, as you pointed out, look at US treasuries, offering 1.6%, and with Apple, they’re going to return, between dividends and stock buyback, upward of 7% per year. Estimates have gotten cut in half. So, unlike a year ago, you have gone ahead and reset that, and there are potentially positive catalysts with the Worldwide Developer Conference on June 10th. Also, on margin, commodity prices, DRAM and flash, are starting to come down again. Those were going up in Q4, which a lot of people chose to ignore. Flash is a big component in their cost structure, that’s going to help them a lot. A lot of great investments start out as trades. Look at what the company has done. For years they returned no capital to shareholders. [CEO Tim] Cook started a dividend policy a year ago, and now he’s increased that tremendously. Think about that: a $400-billion-market-cap company that’s going to return $100 billion to you. That’s really big. Don’t get me wrong, if they weren’t returning this much capital, I wouldn’t own it. But if you’ve got a 7% return per year, and you’ve got US treasuries at 1.6%, and you’ve got new products coming, I think it’s worth a shot.
Apple shares today are up $11.45, or 2.7%, at $441.57.
