Smart money buys in times of extreme fear and panic.

30 April 2016

 

Dear Fellow Investor,

 

I hope all of you are enjoying your 3 day break this labor day holiday.

 

I am enjoying a bite of the Apple.

 

On Thursday, Carl Ichan sold his entire 6.3 USD billion stake in Apple and caused a panic sell down in Apple shares.  Financial headlines trumpeted the negatives of Apple such as slowdown in China, failure of Apple watch, lack of innovation, a one trick pony, declining revenue etc.

 

Carl Ichan is not an investor he is a corporate raider.  He buys up companies using high leverage and debt and strips their assets.  He has destroyed many companies, destroyed many lives  and profited  handsomely.

 

He was never happy with Tim Cook CEO of Apple. Cook is sitting on a huge cash hoard of USD 250 billion.     

Ichan had his greedy eyes on Apple’s cash hoard and tried to persuade Cook to spend and diversify into other companies but Cook refused.  Ichan tried every way to force the issue but failed and in disgust Ichan has walked away selling his stake with a sour grapes message. Cook won the battle.

 

Ichan’s media friends in the Wall St Journal/ New York Times/ Bloomberg and CNBC magnified the emotion and panic selling in Apple.

 

Let’s look at the facts. Apple has net cash of over USD 30 a share. Back the cash out and the PE is 7.  By tech company standards this is cheap. Google is over 20 PE.

 

They just raised their dividend by 10 % and will buy back over 30 billion of their shares. This will increase their earnings.  Apple will soon launch their Phone 7 and are focusing on their Apple pay venture which may rival Pay Pal. 

 

All good companies suffer bad quarters and in my opinion this will pass.  The Apple phone, I Pad  are still highly sought after and Apple is still on the cutting edge of innovation. They are also diversifying into their services division

 

Daily chart of Apple showing one month of price action. Notice the last 3 bars on the right edge of the chart. These are volume spread analysis patterns of bag holding, hidden potential selling on wide range price bars and ultra high volume. They are evidence of smart money buying. Smart money buys in times of extreme fear and panic.

 

This is a rare opportunity.

 

I personally bought a small position 100 shares  @ 97.09 in the panic and look for a target of at least 120 as well as a handsome dividend.  

 

We can buy Apple shares for those who have a Phillip PGWA account. Please contact me if you wish to do so. 

For those who hold Inari, Inari should recover with Apple as Inari is a supplier of Apple components and will grow with Apple . 

 

Inari will also benefit as they are diversifying into the China hand phone space with their recent acquisition of PCL a Taiwanese computer component company.   

 

Invest well and grow your wealth,

 

Bill