Today an analyst at JMP Securities (interesting how its so similar to JPM.....accidental credibility perhaps) did the unthinkable and downgraded Apple. This sent the stock down nearly 5% on the day and spooked a lot of people. The time during options expiration week is pretty interesting, as well as how he ignored the insatiable demand for the iPad 2. But his reasons for downgrading are also very suspect. Here is a link to the WSJ discussing it.
He cites slowing sales growth at Hon Hai, the owner of the main manufacturer of some of Apple's products, as evidence that Apple is not producing as many products. Correlation does not imply causation. This is just ridiculous. You can look around at all the sold out iPads, the fact that Verizon now has 12% of the iPhone traffic and has only been selling them a month, and see that if anything, Apple is producing more!
His logic goes like this: Hon Hai's sales are decreasing. Hon Hai's makes Apple products. Therefore, Apple must not be producing as many products and sales will fall. How do we know they just aren't producing as many products for other people because people just want iPads and iPhones? Maybe they are just slowing down because of the Chinese New Year? Perhaps they just can't afford to make some products because they operate on razor thin margins and the drubbing of the dollar has made it unprofitable to make them anymore? I would take this report with a grain of salt.
I honestly would not be surprised if this firm has a short position in Apple and is just trying to manipulate the stock for their own gain. But it doesn't matter, because now you can get AAPL even cheaper!
Hopefully this guy will be banned from buying an iPad!
Also, here is why there is a shortage of iPads.
Disclosure: I may or may not own any of the securities mentioned and am not an investment advisor. Please do your own due diligence before investing in any securities mentioned.
Thursday, March 17, 2011
Tuesday, March 15, 2011
The iPad says there's no inflation, so there is no inflation
Almost every commodity, other than natural gas, is up the past 6 months. Oil, corn, copper, iron, wheat, soybeans have all had tremendous increases in price, some of them doubling and tripling in price. But the federal reserve says to ignore all that because this year's iPad model is the same price as last years.
Unfortunately, as one attendee said, " "I can't eat an iPad." I also can't put an iPad in my gas tank. But I can kill the green pigs that ate my eggs, so it's all cool. Perhaps we should give iPads to all the people rioting around the world because they can't afford food. In fact the first generation iPad has actually dropped in price, which is clearly evidence of the dreaded deflation.
Disclosure: I may or may not own any of the securities mentioned and am not an investment advisor. Please do your own due diligence before investing in any securities mentioned.
Unfortunately, as one attendee said, " "I can't eat an iPad." I also can't put an iPad in my gas tank. But I can kill the green pigs that ate my eggs, so it's all cool. Perhaps we should give iPads to all the people rioting around the world because they can't afford food. In fact the first generation iPad has actually dropped in price, which is clearly evidence of the dreaded deflation.
Disclosure: I may or may not own any of the securities mentioned and am not an investment advisor. Please do your own due diligence before investing in any securities mentioned.
This Guy (or Gal) is a True Winner
If you haven't heard, Berkshire Hathaway is buying specialty chemical company Lubrizol (LZ) for $135, a 28% premium from its previous close.
But here is an interesting little trade that occurred last Wednesday. I wish I had this kind of luck. Less than a week after buying those options, the company is bought out and the options are sold for a cool $5.71 million dollar gain!
Disclosure: I may or may not own any of the securities mentioned and am not an investment advisor. Please do your own due diligence before investing in any securities mentioned.
But here is an interesting little trade that occurred last Wednesday. I wish I had this kind of luck. Less than a week after buying those options, the company is bought out and the options are sold for a cool $5.71 million dollar gain!
Disclosure: I may or may not own any of the securities mentioned and am not an investment advisor. Please do your own due diligence before investing in any securities mentioned.
Sunday, March 13, 2011
iPad 2 News
If I do any more post about the iPad I'm going to have to rename the blog iPadanomics. But here's one more with links to relevant iPad 2 news.
- Forbes says 70% of iPad 2 buyers are new to the iPad
- How much does an iPad 2 costs to make? Depends on who you are asking, but the profit margins are pretty huge based on these estimates.
- Here's a movie created entirely on the iPhone 4 and edited on an ipad 2
- This guy paid $900 to be first in line to buy the new iPad
- This analyst says Apple sold 500,000 iPads this weekend
- Barely 20 years after the fall of communism, Russians are capitalizing on iPad 2 arbitrage
Here are a few ways to capitalize on Apple over the next few months:
1. Buy vertical call spreads. The Jan 12 345/355 call spread is currently going for around $500, and will return $500 if Apple is above $355 in January 2012.
2. Sell Apple cash secured puts. The Jan 12 $255 put is selling for $10.50. If apple is below $255 in January, you will have to buy 100 shares of apple for a net cost of $244.5. The $300 put is selling for $21.15. If Apple is over $300 in January, you keep the full $2,115 or have to own Apple for a net cost of $278ish. Seems like a good bet to me.
3. Sell covered calls on stock. Buy 100 shares of Apple and sell a Jan 12 $400 call for $24. You immediately lower your basis to around $327 and can still participate in any upward movement in the stock up until $400. Total return if Apple is above $400 in January is $7,300 per covered call or around 21%.
Disclosure: I may or may not own any of the securities mentioned and am not an investment advisor. Please do your own due diligence before investing in any securities mentioned.
- Forbes says 70% of iPad 2 buyers are new to the iPad
- How much does an iPad 2 costs to make? Depends on who you are asking, but the profit margins are pretty huge based on these estimates.
- Here's a movie created entirely on the iPhone 4 and edited on an ipad 2
- This guy paid $900 to be first in line to buy the new iPad
- This analyst says Apple sold 500,000 iPads this weekend
- Barely 20 years after the fall of communism, Russians are capitalizing on iPad 2 arbitrage
Here are a few ways to capitalize on Apple over the next few months:
1. Buy vertical call spreads. The Jan 12 345/355 call spread is currently going for around $500, and will return $500 if Apple is above $355 in January 2012.
2. Sell Apple cash secured puts. The Jan 12 $255 put is selling for $10.50. If apple is below $255 in January, you will have to buy 100 shares of apple for a net cost of $244.5. The $300 put is selling for $21.15. If Apple is over $300 in January, you keep the full $2,115 or have to own Apple for a net cost of $278ish. Seems like a good bet to me.
3. Sell covered calls on stock. Buy 100 shares of Apple and sell a Jan 12 $400 call for $24. You immediately lower your basis to around $327 and can still participate in any upward movement in the stock up until $400. Total return if Apple is above $400 in January is $7,300 per covered call or around 21%.
Disclosure: I may or may not own any of the securities mentioned and am not an investment advisor. Please do your own due diligence before investing in any securities mentioned.
iPad 2 First Impressions
I've had my iPad 2 since Friday and i've had a chance to play with it. Here are some first impressions:
-It's unbelievably smooth and fast.
-The new gyroscope is pretty cool. When playing Jenga, you spin around to go around the tower of blocks.
-The cameras are pretty awful, but work fine for what they are intended to do.
-Watching Netflix and Xfinity on it is awesome. Netflix needs to beef up their streaming library though.
-There are reports that there are light leakage issues around the edges and corners. I notice it a little in mine, but it's not terrible. I might try exchanging it for a new one, but I haven't lost any sleep over it.
-The lack of Adobe Flash doesn't bother me one bit. I have not run into any problems surfing the internet, plus there are apps that convert flash to HTML5 that can be downloaded in the App Store.
All in all, I think buying the iPad 2 was a great decision. I love it. It's simple to use but is extremely useful in so many little ways. I think it's going to be a huge windfall for Apple. I just went with the wifi only 16gb version because I don't need to use it for holding tons of music and videos. I primarily use it for apps, streaming music from my itunes or pandora, watching movies on Netflix, and playing games. Words with friends is my favorite. If you wanna play, hit me up. Username is Flenjamin.
Disclosure: I may or may not own any of the securities mentioned and am not an investment advisor. Please do your own due diligence before investing in any securities mentioned.
-It's unbelievably smooth and fast.
-The new gyroscope is pretty cool. When playing Jenga, you spin around to go around the tower of blocks.
-The cameras are pretty awful, but work fine for what they are intended to do.
-Watching Netflix and Xfinity on it is awesome. Netflix needs to beef up their streaming library though.
-There are reports that there are light leakage issues around the edges and corners. I notice it a little in mine, but it's not terrible. I might try exchanging it for a new one, but I haven't lost any sleep over it.
-The lack of Adobe Flash doesn't bother me one bit. I have not run into any problems surfing the internet, plus there are apps that convert flash to HTML5 that can be downloaded in the App Store.
All in all, I think buying the iPad 2 was a great decision. I love it. It's simple to use but is extremely useful in so many little ways. I think it's going to be a huge windfall for Apple. I just went with the wifi only 16gb version because I don't need to use it for holding tons of music and videos. I primarily use it for apps, streaming music from my itunes or pandora, watching movies on Netflix, and playing games. Words with friends is my favorite. If you wanna play, hit me up. Username is Flenjamin.
Disclosure: I may or may not own any of the securities mentioned and am not an investment advisor. Please do your own due diligence before investing in any securities mentioned.