Suddenly there's a lot of money being poured into Apple

Someone is gobbling up the shares. It's about time.

The simplest explanation for why Apple's share price is up 9% in the past two weeks is that more money being poured into the stock than is being taken out.

Where's that money coming from? We can make some educated guesses.

  • Apple. In April the company announced that its board had allocated an extra $35 billion for share repurchases, bringing the total Tim Cook is authorized to spend buying back Apple shares to $175 billion.
  • Warren Buffett wannabees. The discovery two weeks ago that Berkshire Hathaway purchased about $1 billion worth of Apple in the March quarter may have been the signal other value funds were waiting for. The stock jumped 3.7% in one day.
  • Hedge funds. On Thursday CNBC Halftime's Jon Najarin spotted two "extremely large" trades in Apple on the midwest stock exchange—one for 5 million shares, the other 7.5 million. "That's an awful lot of billions that someone just plunked down," he told listeners, exaggerating a bit. "Most probably a hedge fund."

According to every sell-side analyst with a published price target, Apple is still deeply undervalued—that 9% bump notwithstanding. As Marc Andreessen put it in January, the last time the stock closed above $1o0 a share: "Apple trades like a steel mill on its way out of business."

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15 Comments

  1. Gianfranco Pedron said:
    “Most probably a hedge fund.”

    Could those trades have been Apple repurchasing stock?

    Is there any way to tell?

    1
    May 27, 2016
    • I’m told by someone who knows more than I about this stuff that Apple does not generally repurchase shares through the midwest exchange.

      1
      May 27, 2016
  2. Tom Sidla said:
    The market undervalues cash flow and overvalues growth.

    At least when it comes to the tech sector.

    2
    May 27, 2016

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