Tag Archives: David Einhorn

News, Politics, Government

Another Victory For Activism: Oil States Announces Spin-Off, Jana's Rosenstein and David Einhorn Rejoice

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By Agustino Fontevecchia, Forbes Staff

In what could result in a big rainfall for David Einhorn and Barry Rosenstein, Oil States International announced plans to spin-off its accommodations unit into a standalone, publicly traded company.  Coming late after the closing bell on Tuesday, the announcement sparked a big rally in the stock in the post-market session.  It wasn’t immediately clear what would happen to bondholders sitting on about $1 billion in debt, which would have to be made whole for an additional $150 million if management wants to extract as much value as possible from the deal, as I’ve previously reported. …read more

Source: FULL ARTICLE at Forbes Latest

Business, Finance, Occupation & Industry

Hedge Fund Billionaires John Paulson And David Einhorn Lost $640M In Gold Bloodbath

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By Agustino Fontevecchia

The gold bloodbath that hit the market over the past two trading sessions has definitely caused a dent in the portfolio of billionaire hedge fund managers. John Paulson and David Einhorn suffered combined losses of more than $640 million since Friday, according to their latest SEC filings, with the bulk concentrated in the former?s massive position in the SPDR Gold ETF. Einhorn’s Greenlight took a big hit on its holdings of the gold miners ETF.

From: http://www.forbes.com/sites/afontevecchia/2013/04/15/hedge-fund-billionaires-john-paulson-and-david-einhorn-lost-640m-in-gold-bloodbath/

Business, Finance, Occupation & Industry

The Biggest, Cheapest, and Fastest-Growing Company in America

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By John Maxfield, The Motley Fool

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Say what you will about Apple , but no other company comes close to being the biggest, cheapest, and fastest-growing company on the S&P 500 . Check out this chart:

Apple: The Biggest, Cheapest, and Fastest Growing Company in America | Create infographics

So what does this mean for investors? In my opinion, it means that Apple is a bargain right now. Does it face challenges? Of course, but name one company that doesn’t. The most recent example is Samsung’s partnership with Best Buy — though you can click here to see why the pairing may ultimately work out in Apple’s favor.

At the same time, the technology giant is sitting on a veritable mountain of cash — $137 billion, to be precise. And it’s preparing to give even more back to shareholders. “Apple’s management team and Board of Directors have been in active discussions about returning additional cash to shareholders,” read a press release at the beginning of February.

Finally, there’s innovation. Sure, Apple hasn’t released a truly innovative product since Steve Jobs‘ passing. Yet it’s a mistake to assume the company is now incapable of wowing current and future customers. As my colleague Rick Munarriz wrote last month, “Who knows if Apple isn’t going to beat Google to wearable iSpecs, revolutionize the cable industry with a la carte programming, or put out a product that may not seem necessary at first (think iPad) but proves indispensable in short order?”

Investors don’t get rich by following the crowd. Had you done so, you would have bought Apple at $700, when hedge fund managers like David Einhorn were proclaiming it’d be the next $1 trillion company. Instead, you get rich by buying great companies at bargain-basement prices. And there are few that fit this description better than Apple.

There’s no doubt that Apple is at the center of technology’s largest revolution ever and that longtime shareholders have been handsomely rewarded, with more than 1,000% gains. However, there is a debate raging as to whether Apple remains a buy. The Motley Fool’s senior technology analyst and managing bureau chief, Eric Bleeker, is prepared to fill you in on both reasons to buy and reasons to sell Apple and what opportunities are left for the company (and your portfolio) going forward. To get instant access to his latest thinking on Apple, simply click here now.

var FoolAnalyticsData = FoolAnalyticsData || []; FoolAnalyticsData.push({ …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Apple's $5 Billion Mistake

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By Tim Brugger, The Motley Fool

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With its stock price down 35% over the past six months, and concerns about a lack of innovation and growing competition, Apple doesn’t need the PR nightmare that its new uber campus will likely become. According to an “anonymous insider,” who spoke with Businessweek, Steve Jobs‘ dream of “building the best office building in the world” will become a reality — for what’s estimated to be a staggering $5 billion price tag. The money itself isn’t the problem, of course; Apple has that in its petty cash drawer. But the timing of the project? That’s another matter altogether.

The new digs
Four months before Apple guru Steve Jobs passed away, he gave a presentation to the Cupertino, CA city council. Along with several architectural renderings, Jobs described what he envisioned as a self-sustaining, four-story circular structure, large enough to house as many as 12,000 employees. With 2.8 million square feet, acres of trees, and imported 40-foot panes of glass, this was never going to be a cheap proposition.

Initially, Jobs and Apple were working with about a $3 billion budget. Now, with projected costs ballooning to $5 billion, Jobs’ dream campus would cost about three times that of your typical downtown commercial high-rise building on a per square foot basis. According to the aforementioned “insiders,” part of the delay in breaking ground — Jobs had hoped for a 2012 start date — lies in Apple CEO Tim Cook and his team’s attempts to shave $1 billion in costs.

Cook’s found himself between a rock and a hard place. Altering Jobs‘ vision for the new campus would enrage Apple fans, who still revere Jobs as an iconic, larger-than-life figure. But proceeding with a $5 billion project when shareholders are sitting on massive losses, and big hitters like David Einhorn are screaming for Apple to share some of its $137 billion in cash, has the makings of a publicity disaster.

What should really concern investors
As competitors across the mobile space have continued rolling out new designs that have narrowed — or in some investor’s views, surpassed — Cupertino’s offerings, Apple investors are left waiting for something —  anything — they can sink their teeth into. There’s no arguing with Apple’s profitability, or its strong financials, but its product introduction cycle, historically a little over 300 days for the iPad line, needs to tighten up. By comparison, Samsung and Nokia  seem to have a new smartphone coming out weekly.

As for Microsoft  and Google , both have entered the mobile hardware side of the market, but neither are hamstrung by having to build their own devices to expand offerings as Apple is with its iOS, so bringing the “next great thing” to market takes nothing more than an OS licensing deal. Microsoft recently released its own Surface Pro and, while it’s expensive, hopes are high. Microsoft’s RT tablet is another story, as poor sales by its RT partners have some discounting RT by as …read more

Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

When Will Apple Boost Its Dividend? Soon.

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By Daniel Sparks, The Motley Fool


Source: SEC filings. Calendar quarters shown. Cash returned includes dividends and buybacks. Chart created by Evan Niu.

Apple must inevitably return more cash to shareholders in the near future. CEO Tim Cook’s statements at the 2013 Goldman Sachs conference again reiterated management’s recognition of its enormous cash pile: “We do have some cash. … And it’s an incredible privilege for us to be in a position that we can seriously consider returning additional cash toward shareholders.”

Topeka Capital Markets analyst Brian White projects that Apple’s cash balance could reach $241 billion by the end of fiscal 2015 if the company doesn’t return more cash to shareholders than it already is.

Apple is a top-notch dividend stock
Though Apple may have fully qualified as a growth stock several years ago, it’s now a top-notch dividend stock. In fact, the stock‘s qualities as an income investment are largely undervalued.

Apple’s current dividend yield of 2.4% may not seem very attractive to income investors. But with a likely dividend increase on the horizon, and given Apple’s enviable ability to generate large amounts of free cash flow, the stock is a first-class bet for future income — especially at today’s conservative valuation.

A key metric income investors care about when analyzing the quality of a company’s dividend is the payout ratio. The payout ratio is simply equal to a company’s annual dividend divided by its annual earnings. The higher the ratio, the less sustainable the dividend if business fundamentals go awry.

Most established dividend stocks have payout ratios well over 50%. Apple’s is just 12%. Microsoft and Intel , two well-recognized dividend stocks in the tech sector, have payout ratios of 45% and 40%, respectively. Keep in mind: The lower, the better.

Another key measurement in assessing the quality of a company’s dividend is a its ability to generate free cash flow, or the cash that can be used to pay out dividends.

Apple has an unearthly ability to turn $0.28 of every dollar of sales into free cash flow. That’s practically unheard of in the consumer-electronics hardware industry. Microsoft manages to do better, with a free cash flow-to-sales ratio of 38%, but this is expected — the company’s primary businesses is selling high-margin software. Intel, despite its market leadership, earns just $0.15 of free cash flow on every dollar of sales — considerably less than Apple.

Apple, therefore, has excellent prospects as a dividend stock. In fact, analysts surveyed by Bloomberg collectively believe that Apple will boost its dividend to $4.14 per share. That amounts to a dividend yield of 3.7% — far higher than today’s yield of 2.4%.

Give us a dividend
There is no denying it. Apple has too much cash. The company will probably make an announcement to return more of it to shareholders soon. This is just one of many reasons the stock is a top pick among my outperform

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The one-year anniversary of Apple‘s dividend on March 19 came and passed with no announcement from Apple to boost its dividend. Leading up to the anniversary, there was a lot of speculation around what exactly the company could announce. Though the buzz has faded, it doesn’t mean Apple won’t announce a plan to return even more cash to shareholders. In fact, investors should rest assured — an announcement is basically inevitable.

Some background
Just over a year ago, Apple announced plans to initiate a dividend and share-repurchase program. The quarterly dividend amounted to $2.65 per share. At today’s share price, the dividend yields a 2.4% return to investors. Apple’s share-repurchase program meant repurchasing $10 billion in shares over a three-year period.

Even at the time of the announcement, the payout seemed conservative. But a year later, investor concern looms: Despite Apple‘s payouts, its massive cash hoard — now more than $137 billion — is still growing even larger. Investors want in on it.

David Einhorn of Greenlight Capital made headlines in February, when he proposed that Apple pay out some of its cash in the form of preferred stock. Apple responded with an official statement, admitting that the company has found itself “in the fortunate position of continuing to generate large amounts of cash, including $23 billion in cash flow from operations in the last quarter alone.” The statement asserted, “Apple’s management team and Board of Directors have been in active discussions about returning additional cash to shareholders.”

Why Apple can pay out more cash
If it isn’t clear already, Apple has enough cash sitting around to pay out more to shareholders. In fact, Apple has $145 in cash on its balance sheet for every share.

“The only thing that Apple can’t do is nothing,” Fellow Fool Evan Niu asserted. Apple’s returned only a “sliver of cash” so far.

Evan illustrates his point with this mind-boggling chart.

Source: SEC filings. Calendar quarters shown. Cash returned includes dividends and buybacks. Chart created by Evan Niu.

Apple must inevitably return more cash to shareholders in the near future. CEO Tim Cook’s statements at the 2013 Goldman Sachs conference again reiterated management’s recognition of its enormous cash pile: “We do have some cash. … And it’s an incredible privilege for us to be in a position that we can seriously consider returning additional cash toward shareholders.”

Topeka Capital Markets analyst Brian White projects that Apple’s cash balance could reach $241 billion by the end of fiscal 2015 if the company doesn’t return more cash to shareholders than it already is.

Apple is a top-notch dividend stock
Though Apple may have fully qualified as a growth stock several years ago, it’s now a top-notch dividend stock. In fact, the stock‘s qualities as an income investment are largely undervalued.

Apple’s current dividend yield of 2.4% may not seem very attractive to income investors. But with a likely dividend increase on the horizon, and given Apple’s enviable ability to generate …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Here's What This 1,022% Gainer Has Been Buying

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By Selena Maranjian, The Motley Fool

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Every quarter, many money managers have to disclose what they’ve bought and sold, via “13F” filings. Their latest moves can shine a bright light on smart stock picks.

Today, let’s look at investing giant Daniel Loeb, founder of the Third Point LLC hedge fund. Loeb is a well known activist investor, famous for publicly airing his opinions about companies in which he invests, and not mincing words when he’s displeased. Loeb was instrumental in pointing out discrepancies in former Yahoo! CEO Scott Thompson’s biography – paving the way for Yahoo!’s new CEO, Marissa Mayer.

His activity bears watching, because the guy seems to know a thing or two about investing. According to the folks at GuruFocus.com, over 15 recent years, Loeb racked up a cumulative gain of 1,022%, compared with just 124% for the S&P 500.

The company’s reportable stock portfolio totaled $5.5 billion in value as of December 31, 2012.

Interesting developments
So what does Third Point‘s latest quarterly 13F filing tell us? Here are a few interesting details.

The biggest new holdings are News Corp. and Tesoro. Other new holdings of interest include AbbVie and Herbalife . AbbVie was split off from Abbott Labs, and contains the pharmaceutical business, while Abbott focuses on medical, diagnostic, and nutritional products. AbbVie is saddled with a lot of debt, but it sports about $18 billion in annual revenue, more than $6 billion in free cash flow, and gobs of cash. Bears don’t like its being very dependent on its blockbuster drug Humira, which generates half its revenue. It does have other drugs, though, and more in its pipeline – and a 4.1% dividend yield.

Herbalife , while having the support of Loeb and Carl Icahn,  has some high-profile naysayers, such as David Einhorn of Greenlight Capital, and Bill Ackman of Pershing Square Capital Management. The company recently reported robust results, with revenue in 2012 rising 18% over year-earlier levels. It sports an attractive 3.2% dividend yield, but those worried about red flags raised by critics (such as concerns about its multi-level-marketing strategy) might want to wait for the dust to settle.

Among holdings in which Third Point increased its stake was ARIAD Pharmaceuticals , which received FDA approval for its leukemia drug Iclusig – though its initial sales have been weak, so far. (The drug seems to be nearing approval in Europe, though, which bodes well.) ARIAD‘s bone-tumor drug ridaforolimus was rejected in Europe, but it might still prove effective against other cancers. The company has been spending heavily on research and development, and it needs some more success from its pipeline, as it consumes a lot of cash.

Third Point reduced its stake in companies such as Hillshire Brands , which has been trading near a 52-week high. The company, the result of a split-up of Sara Lee, describes itself as “a leader in meat-centric food solutions for the retail and foodservice markets,” and encompasses brands such as …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

1 Stock to Buy in April

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By Motley Fool Staff

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As we do each month, we asked 10 of our top analysts across various sectors for one stock that looks especially compelling right now. Here are the companies they singled out.

Dan Caplinger: My stock for the month is Chinese online-search giant Baidu . I’ve been a big fan of emerging markets for a long time, and China in particular intrigues me because of the language and cultural differences that provide such a big barrier to entry in many industries. Although fast-food giants and other consumer-facing U.S. companies have done a good job of building a big presence in the nation, Baidu has managed to fend off Google and retain a commanding share of the online search market. The stock’s recent plunge in reaction to up-and-comer Qihoo 360 seems far too overblown, especially given the potential for huge growth in the search market in China and in neighboring countries that will leave room for multiple competitors in the space.

Moreover, investors are forgetting that Baidu has expansion plans beyond China, and its prospects for picking up market share in other lucrative emerging Internet markets look bright. Best of all, even if its lightning-fast growth pace slows, being able to pick up shares at a trailing multiple below 20 is a bargain that’s too tempting to resist.

John Maxfield: Apple 

If I were the world’s most interesting man (which I most certainly am not) here’s how I’d sum up my selection of Apple as the one stock to buy in April: I don’t usually buy technology stocks, but when I do they’re dirt cheap.

Apple is patently, even offensively, inexpensive. It went from over $700 per share last September — at which point even seasoned investors like David Einhorn were predicting it’d be the “first trillion-dollar company” — down to roughly $420 earlier this month. It’s the classic case of mania followed by utter despair.

On a valuation basis, the company’s stock trades for a little more than 10 times its estimated future earnings over the next 12 months. If you exclude its obscene cash hoard, that figure falls to roughly seven times earnings. And even more telling is its 2.3% dividend yield, which is bound to increase, given that Apple is in “serious discussions” about returning more capital to shareholders.

While I’ve been wrong before, and will be again, I’ve personally bought Apple at three different price points during its descent, and couldn’t be happier with the decision. 

Keith Speights: Biogen Idec  is on a roll that I don’t see stopping anytime soon. Shares are up more than 40% during the last year. The biotech currently stands as the leader in the multiple sclerosis market with blockbuster drugs such as Avonex and Tysabri. Many expect Biogen’s Tecfidera, which was recently approved by the FDA, to exceed the success of both of those drugs and become the top-selling MS drug within the next few years.

The excitement over Tecfidera stems from several important advantages …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Why Vodafone Is Poised to Outperform

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By Brian Pacampara, Pacampara, The Motley Fool

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Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool’s free investing community, U.K. mobile giant Vodafone Group has earned a coveted five-star ranking.

With that in mind, let’s take a closer look at Vodafone and see what CAPS investors are saying about the stock right now.

Vodafine facts

Headquarters (founded)

Newbury, U.K. (1984)

Market Cap

$137.4 billion

Industry

Wireless telecommunication services

Trailing-12-Month Revenue

$71.8 billion

Management

CEO Vittorio Colao (since 2008)
CFO Andrew Halford (since 2005)

Return on Equity (average, past 3 years)

6.2%

Cash/Debt

$12.2 billion / $57.1 billion

Dividend Yield

3.7%

Competitors

AT&T
France Telecom
Telefonica

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 95% of the 1,328 members who have rated Vodafone believe the stock will outperform the S&P 500 going forward.

Earlier this month, one of those Fools, Option1307, succinctly summed up the bull case for community:

[Vodafone] owns a large stake in Verizon wireless and the market is not recognizing this. Add into the mix that Verizon currently pays [Vodafone] a nice dividend annually for their Verizon wireless stake and that this is a David Einhorn pick and the odds are in your favor!

Picked up some shares at [$26] and will hold until this thesis plays out or things drastically change. You get a pretty nice dividend to sit and wait as well so no reason to hurry and sell this one.

If you want market-thumping returns, you need to put together the best portfolio you can. Of course, despite a strong four-star rating, Vodafone may not be your top choice.

We’ve found another stock we are incredibly excited about — excited enough to dub it “The Motley Fool’s Top Stock for 2013.” We have compiled a special free report for investors to uncover this stock today. The report is 100% free, but it won’t be here forever, so click here to access it now.

Want to see how well (or not so well) the stocks in this series are performing? Follow the TrackPoisedTo CAPS account.

The article Why Vodafone Is Poised to Outperform originally appeared on Fool.com.

Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends France Telecom (ADR) and Vodafone. The Motley Fool owns shares of France Telecom (ADR). Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

From Peak to Peak: What I've Learned About Investing in the Last 5 Years

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By Travis Hoium, The Motley Fool

AAPL P/E Ratio TTM Chart

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I started investing in the ga-ga days of the late ’90s. You could throw a dart at the market page of the newspaper and hit a winner — and a lot of investors did. 

Then the Internet bubble burst, and I learned a little bit about the difference between speculating and investing. But the past five years have been unlike anything we’ve seen in my lifetime. The financial world almost collapsed, housing dropped, and the stock market went on a rollercoaster ride that made many investors sick of the market altogether. 

Through it all, I’ve stayed invested, and I’ve emerged better off than I was five years ago in many ways. Here are a few of the lessons I learned from the 2007 peak to the most recent highs of the Dow Jones Industrial Average . 

Being a bear isn’t a bad thing
A lot of people made a lot of money betting against the housing market and banking sector when the Great Recession hit. John Paulson and David Einhorn became household names by being bearish at exactly the right time. 

I won’t advocate trying to time the market, and we don’t have the ability to make the same bets hedge funds did during the crisis, but we can learn something from their bearishness. It isn’t bad to have a few short positions thrown into your portfolio at any given time. You don’t need to be a market bear to short a stock. Do the same research you would normally do and find companies that are overvalued and that you think will go down in value. A market panic usually hits fundamentally weak companies first, so a recession can be your friend when it comes to these short bets. 

I was recently short Sony because I thought it was a dying consumer-electronics company with a terrible business model. Sony has made bets on the PC, console gaming, and TVs at exactly the wrong time and no longer makes compelling products that brought it consumer electronics fame (remember the Walkman?). This had the company posting massive losses as sales dropped. It so happened that the market went up while I was short the stock, but the stock went down — a profitable trade for me.

I’m currently short Amazon , an opinion contrary to that of many Fools. But if we go into another recession, Amazon will be hurt more than most companies, so it’s a bit of a hedge for me. It’s already unprofitable, and if sales growth slows or, heaven forbid, falls, the stock will tumble. In a good economy, I think it’s overvalued. But in a bad economy, I think it would fall hard and offset other potential losses in my portfolio. 

In 2008 and 2009 I didn’t have any short positions, but I wish I had. Next time a crash rolls around, I’ll be more prepared. 

Trust your instincts
There are a lot of pundits and money managers trying …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Herbalife: Dog, or Just an Underdog?

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By Rich Duprey, The Motley Fool

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Short-sellers and hedge funds may be shadowy, but sometimes they’re the smartest guys in the room. They’ve done their homework, and they’re willing to bet their capital against the crowd — an investing strategy that can be as lucrative as it is contrarian.

On Motley Fool CAPS, the 180,000-member-driven investor community where informed opinion is translated into stock ratings of one to five stars, we also have investors who find the chinks in a company’s armor and correctly call its fall. We call them “Underdogs” if they’ve earned 100 or more CAPS points by correctly predicting that one or more stocks would underperform the market.

Today I’m looking at nutritional supplements maker Herbalife , which lost more than a third of its value after becoming the centerpiece of an argument between dueling hedge fund operators. Investors remain wary of its multi-level marketing structure, so there’s little doubt why the nutritionals seller carries the lowest one-star CAPS rating.

It’s been a bit of a wild ride, so if there are any who’ve scored big by correctly predicting which stocks will fail, it may be worth our while to check out those they think will ultimately succeed. And CAPS All-Star Valyooo is one who’s earned the underdog moniker and recently predicted that Herbalife would rout the shorts.

Herbalife snapshot

Market Cap

$4.3 billion

Revenues (TTM)

$4.1 billion

1-Year Stock Return

(35%)

Return on Investment

50.6%

Estimated 5-Year EPS Growth

14.8%

Dividend and Yield

$1.20/2.9%

Recent Price

$41.50

CAPS Rating (out of 5)

*

Source: FinViz.com.

Of course, not every short sale goes as planned, which makes shorting a risky proposition. Stock prices can be irrational longer than you have money to stay in the game. And you don’t want to end up with fleas by lying down with the dogs, so make sure you do your homework.

A scary opportunity
Not that there haven’t been doubts before about Herbalife and its MLM business model, but when David Einhorn of Greenlight Capital appeared on the supplement maker’s conference call early last year asking some tough questions about its operations, investors immediately suspected the worst and bolted for the exits. Einhorn never did take a position in Herbalife — short or long — and it seemed to be on its way to a comeback when Pershing Capital’s Bill Ackman made a very public splash of his very large short position, raising all the same fears and once again plunging the stock into chaos.

That itself turned into a bit of a melodrama when Daniel Loeb and Third Point Capital went very long on Herbalife, saying it was ludicrous to think the FTC would shut down the company. Then Ackman’s longtime arch-nemesis, Carl Icahn, came out and disparaged his rival’s position, with the two getting into a verbal sparring match on CNBC.

The MLM …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

iPrefs: The Product Apple Didn't Know It Wanted

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By Richard Saintvilus, The Motley Fool

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Steve Jobs once said, “A lot of times, people don’t know what they want until you show it to them.” Apple has always innovated on this premise. It has brought the tech giant much success. But lately, success has been hard to come by; the stock has plummeted 40% from an intraday high of $705 last September.

The sentiment bubble
Apple has a problem that every company wants — a cash hoard of $137 billion, but no epic idea of what do with it. I’ve done my part as a shareholder; the company now has all of my routing numbers. I’m still waiting to hear back. But in the meantime, here comes David Einhorn, the outspoken hedge-fund manager at Greenlight Capital. He’s got a few ideas of his own. One in particular is called “iPrefs,” which has brought him much scrutiny.

I never wanted to like the idea. My loyalty to Apple was too strong. Even CEO Tim Cook called it “a silly sideshow.” I agreed. Besides, Apple didn’t grow to become the largest company in the world with clueless management. Therefore, who’s this guy Einhorn to make cash-use demands? In a recent article, I talked about how I felt he was doing more harm than good. That article prompted an exchange. Einhorn reached out to me and we discussed Apple’s current situation — more specifically, how the company is being appraised by the market.

It requires, however, much more than just a cursory view of Apple’s status to appreciate the company’s $137 billion cash pile in relation to the ebb and flow of market sentiment. Consider this: From January 2009, when the stock traded at $82.33, to its recent intraday high of $705, shares gained 756% in just four years. That’s an absurd average of almost 20% per month for 44 consecutive months. Yet, the P/E ratio never fully reflected confidence — dropping from 35 to 9, where it is today. But the cash kept rising. What’s the problem? The company was carrying too much cash.

The market punished Apple for this by discounting the cash and its future value. By contrast, Texas Instruments , which has 43% more debt than it does cash, is making new 52-week highs. I’ve been scratching my head around this for quite some time. This is despite struggles with declining revenue. There’s no way TI deserves a higher P/E than Qualcomm, much less Apple. Same goes for IBM , which has $33 billion in debt and only $11 billion in cash. It’s not a great ratio. But the market forgives IBM‘s highly levered balance sheet because the company is seen as “shareholder-friendly.” For that matter, IBM‘s 85% return on equity is one of the best on the market.

Coming to terms
There are two lines of thinking here — what management sees and what the Street wants. You can chose to focus on the unit figure misses, but management sees an operation …read more
Source: FULL ARTICLE at DailyFinance

Business, Finance, Occupation & Industry

Chip and Infratructure Winners Steal Thunder at 2013 Mobile World Congress (SNE, INTC, BRCM, AMD, MRVL, FBRC)

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By 24/7 Wall St.

global network concept

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Typically the Mobile World Congress exposition focuses on the smartphone and handset part of the industry, and at this years recently completed show in Barcelona that was once again the case. While there were not a tremendous number of new device launches, new smartphones from LG, HTC and Sony Corp. (NYSE: SNE) made a splash. But in a note today from FBR & Co. (NASDAQ: FBRC), it was less about handsets, and more about infrastructure.

The research team at FBR Capital Markets notes that, surprisingly, the most meaningful announcements at Mobile World Congress 2013 were not handset-driven but rather emphasized the changes in data centers, delivery and infrastructure needed to enable next-generation handset service. The most significant takeaways from the meeting reinforce the idea that they are on the brink of a large-scale shift in data center architecture, and while not yet fully defined, this holds significant implications for chip companies.

The mobile ecosystem is expanding at lightning speed, with endless innovation and new applications of mobile technology. From contactless payments and augmented reality to embedded devices and connected cities, mobile technology is changing the landscape. The impact mobile will have on the world is limitless. The explosive growth of at-your-fingertips data has driven the need for data centers to change some of their basic infrastructure. According to the FBR team, this can have big implications for semiconductor companies.

Their report lists four semiconductor companies that may benefit from the change in data center architecture as companies strive to have the processing power to accommodate huge advances in technology.

Intel Corp. (NASDAQ: INTC), the leader in personal computing and laptop processors, is working to add new products that target the smartphone and tablet industry. The Thomson/First Call consensus price target for Intel is $23.

Troubled industry laggard Advanced Micro Devices Inc. (NYSE: AMD) has promising new low-power, low-cost semiconductors that may prove competitive. The stock has taken a beating over the years and trades at just $2.41 today. The Wall St. consensus estimate is $3.

Broadcom Corp. (NASDAQ: BRCM), which specializes in semiconductor solutions for wired and wireless communications, may have the most potential upside. The company operates in three segments: Broadband Communications, Mobile and Wireless, and Infrastructure and Networking. Its ability to offer solution for multiple segments of the industry may help sustain its heady growth prospects. The consensus price target is $40.

Marvell Technology Group Ltd. (NASDAQ: MRVL) is a big favorite of hedge fund manager David Einhorn, who has almost 6% of his total portfolio in the name. The company also may benefit from data center growth. The consensus price target is $15, which would represent almost a 50% move from today’s price of $10.12.

The inevitable growth of the wireless industry means that semiconductor companies will have to keep up their research and development expenditures to compete in a challenging and changing environment. The companies with the deepest pockets for R&D may prove to be the biggest winners.

Filed under: 24/7 Wall St. Wire, Analyst Calls, Technology, Technology Companies, …read more
Source: FULL ARTICLE at DailyFinance

Articles of Interest

David Einhorn Drops Lawsuit Against Apple

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By The Huffington Post News Editors

SAN FRANCISCO (AP) — A disgruntled shareholder pressing Apple to create a new class of preferred stock has dropped a lawsuit that became a moot point after the iPhone and iPad maker changed the agenda at its annual meeting earlier this week.

Lawyers for hedge fund manager David Einhorn of Greenlight Capital notified U.S. District Judge Richard Sullivan that they no longer plan to pursue the lawsuit in a letter sent Thursday. Sullivan closed the case, which began three weeks ago in New York federal court.

Einhorn had already achieved his goal last week when Sullivan issued a preliminary ruling blocking an Apple Inc. proposal that would have required shareholder approval before preferred stock could be issued. Apple withdrew the proposal from the agenda at its annual meeting held Wednesday.

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Source: FULL ARTICLE at Huffington Post

Business, Finance, Occupation & Industry

St Joe investors lose in court; Einhorn had shorted stock

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Einhorn, president of Greenlight Capital, speaks during the Sohn Investment Conference in New York

(Reuters) – A federal appeals court has made it harder for investors to rely on reports from short sellers when bringing securities fraud lawsuits, in a case against a Florida developer long criticized by prominent hedge fund manager David Einhorn. The 11th U.S. Circuit Court of Appeals in Atlanta said St Joe Co was not liable to investors whose shares lost value after Einhorn, who runs Greenlight Capital Inc, accused the developer of vastly overvaluing its real estate holdings. …

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Source: FULL ARTICLE at Yahoo Business

News, Politics, Government

Apple's Sub-$500 Stock Price is Still Underserved

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By Richard Saintvilus, Contributor

The hot topic of late has been David Einhorn and his fight against Apple to get the tech giant to raise its dividend. Einhorn’s so-called “iPref” is said to have the potential to create $150 worth of value in the stock. With a yield of 1.90%, Apple is already one of the most generous payers on the market. However, the company’s growth has become a concern. It’s now a fight between ideals. With growth being an issue, Apple’s ability to produce growth will be diminished with less cash. But on the other hand, does Apple need a hoard of $137 billion? What’s right and agreeable is somewhere in the middle, or even the bottom third. …read more
Source: FULL ARTICLE at Forbes Latest

News, Politics, Government

Will Apple Scare Pandora and Sirius XM This Week?

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By Richard Saintvilus, Contributor

With Apple’s annual shareholder meeting coming this Wednesday, the company is expected to answer many questions. Clearly, the David Einhorn‘s so-called “iPref” dividend proposal is at the top of the list. But somewhere in the lower third on the agenda, Apple’s much rumored music streaming plans (among others) should be discussed. When these rumors first emerged, there was panic from Pandora’s investors, who sent shares down by as much as 17%. This was before Apple had even addressed the topic. …read more
Source: FULL ARTICLE at Forbes Latest

Business, Finance, Occupation & Industry

Einhorn scores legal victory vs. Apple in cash scuffle

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Einhorn, president of Greenlight Capital, speaks during the Sohn Investment Conference in New York

NEW YORK (Reuters) – A U.S. judge handed outspoken hedge fund manager David Einhorn a victory in his battle with Apple Inc on Friday, blocking the iPhone maker from moving forward with a shareholder vote on a controversial proposal to limit the company's ability to issue preferred stock. U.S. District Judge Richard Sullivan in Manhattan granted a motion by Einhorn's Greenlight Capital for a preliminary injunction stopping a vote on that proposal, scheduled for the company's February 27 stockholders' meeting. …

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Source: FULL ARTICLE at Yahoo Business

Business, Finance, Occupation & Industry

Judge grants Einhorn injunction against Apple

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Einhorn, president of Greenlight Capital, speaks during the Sohn Investment Conference in New York

NEW YORK (Reuters) – A judge handed hedge fund star David Einhorn a victory in his court battle with Apple Inc on Friday, blocking the iPhone maker from moving forward with a shareholder vote on a controversial proposal to limit the company's ability to issue preferred stock. U.S. District Judge Richard Sullivan in Manhattan granted a motion by Einhorn's Greenlight Capital for a preliminary injunction stopping the vote on that proposal. The vote was scheduled for February 27 as part of the company's annual stockholders' meeting. …

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Source: FULL ARTICLE at Yahoo Business