A Cook with an Apple ruling the World

“I recall not so long ago that the iPhone cycle had levelled off and the company was more ex growth than a saddle maker outside of a Model T factory. The stock price fell by nearly one-third, on a whole host of concerns. Remember the letter from Carl Icahn, saying that the stock was worth over 200 Dollars a share. Remember him selling it on concerns around China?”


To market to market to buy a fat pig My goodness the collective are a fickle bunch, we did all know that though. The biggest company by market capitalisation, Apple, was suddenly thrust into the spotlight yesterday after a host of broker upgrades. The services business is great, they said, the iPhone refresh cycle is going to be huge they said and the price targets were all ratcheted higher. I recall not so long ago that the iPhone cycle had levelled off and the company was more ex growth than a saddle maker outside of a Model T factory. The stock price fell by nearly one-third, on a whole host of concerns. Remember the letter from Carl Icahn, saying that the stock was worth over 200 Dollars a share. Remember him selling it on concerns around China? Almost always, the right thing to do is to step away and continue to ask the same questions of management, the products, the consumers and the short to medium term future.

Apple closed at an all time high last evening, the stock is up like gangbusters from the recent lows. The stock was at 90 Dollars last May, the investing world was against them. Since the 8th of May 2016, the most valuable company in the world is 43 percent more valuable. At the time the market cap was overtaken by Google, albeit briefly. The current installed user base (of iPhones) is around 625 million strong, that has risen in 4 years from 200 million. Expectations are for this time next year for 750 odd million people in the Apple ecosystem. And all of them, including me, want a brand new and shiny iPhone 8 or x or 10, or whatever Apple are likely to call the new phone. It has been a hard fought 18 months for Apple shareholders, and another painful reminder that whilst your timing may have not been spot on, you own a great business.

See also these stories, from the WSJ (subscription) – Apple Shares Hit All-Time Closing High as Investors Await Next iPhone. From SeekingAlpha (you will have to sign up) – Will Apple Pay Be A Growth Engine?

And then some fellow who is long Apple comes up with a few valuation metrics (also SeekingAlpha) – Is Apple Worth $150 A Share? A Valuation Analysis. At the same time, Apple seems to have crossed the 20 million music subscribers (9to5MAC) – Apple Music now ‘well past’ 20 million subscribers, Eddy Cue says

The Dow Jones Industrial Average added seven-tenths of a percent to close at 20412, the nerds of NASDAQ added 0.52 percent, as did the broader market S&P 500, to close at 5763 and 2328 points respectively. Three record highs, sitting in a tree ….. Technology and Industrials added just over three-quarters of a percent. It was an Apple a day keeps the bears at bay ….. kinda day!


Local was lekker too, stocks in Jozi, Jozi crested the 53 thousand mark on the ALSI, by the close we had added a little over half a percent to end the session just below that mark, 52 956 when the bell rang for closing time. A broad based rally, bar for the industrial stocks, those managed a modest gain. There was an all time high for Tiger Brands, there were 12 month highs for Barloworld and Adcock Ingram. Must have been me and our family popping some Corenza Cs, this man-flu during summer sucks.

Kumba Iron ore have released results this morning, a stunning turnaround from an iron ore market that has defied all odds. The group cautions on the price, the long range targets for the iron ore price are comfortably below the current levels, suggesting that there is no dividend as “The board remains cognisant of the volatility in certain uncontrollable market factors, such as iron ore prices, which are expected to be under pressure from continued supply growth, as well as exchange rates and freight rates.”

Sounds like too much beyond your control. The stock price has gone bananas, up 345 percent in one year. Yes, you read that right. Over five years, the stock is down 60 percent. Again, you read that right. If you had held the stock since the unbundling of Kumba and Exxaro from Kumba Resources, your Kumba Iron Ore stock would be up 95 percent, and you would have been paid a mountain of dividends. Exxaro is up 91 percent since unbundling back in late 2006.

I guess if you had “done nothing” through the period where Kumba Iron Ore stock went to 600 ZAR plus a share (February 2013) and saw it slide to 26 odd Rand in mid January 2016, you have still done just fine. The bounce-back has been that epic that the company now earns as much per share as their lowest share price was, i.e. around 26-27 Rand. If you know now what you knew then, you could have bought the stock on a 1 multiple forward. Alas, they were going to zero back then, remember? And snuck in, the CFO has resigned after five years in the role.


Linkfest, lap it up

As nations like China and India develop more people have access to comforts like air conditioning. Air conditioning using a high amount of what is predominately dirty electricity. Researchers are developing a system that aims to curb the need for air conditioning – How to keep cool without costing the Earth.

I guess it needed to be a small developed population that tossed away the need for bank notes. It is really no surprise that a payments technology exec reckons that contactless payments (using your phone and fingerprint) will eliminate not only cash, cards too – Australia to be cashless, cards obsolete: MasterCard global exec.

You would like to believe that most stuff that comes out of a politicians mouth is #fakenews, it seems that the general public are most to blame via their social media platforms – Chart: The Fake News Problem.

The Catholic Church actually removed Saint Valentine’s name from “The Calendar”. Legend has it that the “love” part came from birds pairing in mid February. There we go, my little birds, fly free with love. More to the point, and with nerds in charge, thanks to Prof Perry for sharing these geeky I love you – How will economists say ‘I love you’ tomorrow on Valentine’s Day? With graph, charts and economic theory. Wow, that is completely nerdy.


Home again, home again, jiggety-jog. Stocks are lower in Asia, the Japanese markets are down over a percent, the Shanghai and Hong Kong markets are marginally lower. US stock futures are also a little lower, not by too much though. Just a smidgen. With a firmer Rand, we may well start a little lower here.

Sent to you by Sasha, Byron and Michael on behalf of team Vestact.

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