The broad market pullback today presented unexpected gifts here and on AAPL now. We were going to start paring back vs hedging our long today, but we just added a good chunk instead. It's not like us to chase... but the dunkin donuts data point suggests their guidance at 15% revenue growth could be seriously understating the upside here. If K Kups are running 30% at DD and the new Vue brewers SS packs are going just decently, we may see 25-30% growth yoy -- that will take this stock back to the races and let us double what we have.
On that premise and our low cost basis here, it's easy to go in for a little more on this tiny pullback today.
Down another $10, TPX will be back in the mix for us too.
He's on a well deserved break in Hawaii with his wife and friends. We enjoyed the DDonuts comments yesterday, though. See post here today.
A few months ago, with Einhorn waving his arms around on the third drop, we share a lot of information here about our posturing and hedging, "speculating" that other funds were similarly aligned and smiling about einhorn talking about his ability to "einhorn stocks." If you follow the fund performance stats, Davey had a lousy quarter right when many funds were salvaging their year on shorting appl and laying on leveraged bets in the sectors that were running. We suspect Einhorn has pulled his hedges (long shares offset against the bigger short) and a lot of similar offsets will mask the likely big SI drop this next report. Same as for net longs pulling down offset shorts. The tape will likely not show violent volume upside if that view is correct. If you missed other posts, we have been 100% long on the half we have left since ~$42. It has been a good run.
You may recall our PTs from then as we joked as HAL did with Dave the astronaut in 2001 Space Odyssey: "What are you doing Dave?" Our $40 pt for 2012 was met... and our PT of $50 for 2013 is looking more solid by the day. smiling...
Here's some news re our thinking now -- if they can run it up to $50 before earnings, we'll be backed to ~50% hedged or have sold out of some. We don't like to let such easy gains slip away until the company and new ceo demonstrate they have it the baton handled.
p.s. The entire market has been "tricky" as squeeze has been preaching to our younger guys... but we think AAPL has been especially so. We were alarmed at $650+ on the way up because everyone and their grandmother owned it. Now that people seem to roundly hate it, our contrarian thinking kicks in again. Check out Biryni Associates and Gamco's pm comments in recent days... really bright guys and we share their view that nothing is broken at AAPL except frightening street optimism. Back to 100% long on AAPL now, second largest position behind BAC.
Ugh, typed for a while and have to start over, delete key became back button... story of my life...
I agree in terms of the run-up, did not want to be tempted to take some risk off into earnings, and unfortunately we are getting to where I am too tempted. I am expecting a good number, but the problem is for the first time in a while everyone else is too. I do think we will get a solid number, but expecting it to seem "soft" on brewer sales. We sold 4.5 mil last year, so many may be looking for upside from that, or at least shorts and herb will jump on it if there isn't, but that number was inflated for reasons thoroughly discussed on this board. So, if we get 0.75 in eps but only sell 3.5 mil brwers worried there will be a sell off anyway... The wildcard for me is the buyback, on one hand expect it to slow down as the stock price has stabilized and increased, but this Q is the big FCF Q, so... they could easily have bought back aother 100 mil in stock.... that would knock some socks off I iamgine...