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Apple Inc. Message Board

  • squeezetracker squeezetracker Jan 18, 2013 10:09 AM Flag

    Board member Al Gore just bought 59,000 shares... Implications

    Gore bought and added the 59,000 underlying shares (worth $29,500,000 today) to his prior holdings. This was a simple exercise (not a cashless exercise), but there are several nuances. First, unless you assume he is as gumptarded as the unhedged shorts on this board, it is obvious that the BOD members had no idea the stock was going to be pounded to such uneconomic levels since October or he would have surely exercised these old options last year. Second, the old rules for inclusion of the ITM portion at exercise in AMT (but not ordinary income) will be far better this year than last. Third, when ISOs are sold, the ITM portion at time of exercise will be included in ordinary income, and the sale price excess over the market price at the time of exercise (so here, $500) is the capital gains portion.

    So, beyond having good tax counselors, why would a board member buy and hold all of those beauties today? Do you think maybe Al has a good idea of what is coming up for AAPL and that he believes the downside is washed out? I'll suggest he did it for one reason only: he thinks the stock is going alot higher from here and he wants as much of the the end game gain to be in the form of LTCG. Read that slowly if you are not a numbers/tax oriented player, but this is a very comforting data point... and certainly more informative than maybe AAPL is swithcing big pad screen suppliers, changing the configuration/glass, has all the iPad 4 inventory they need for the schedule run, or whatever. We're pretty sure they will continue to make a full sized iPad. LOL

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    • Gumtard

    • mzm821 Jan 25, 2013 11:16 AM Flag


    • Gumtard

    • here is that post re Gore did not sell and the discussion of taxes and timing of the exercise...

      9 unhedged shorts click thumbs down. I guess if I was a gumpsters, unhedged short I would not like this information either LOL

    • A big piece of the fun was Al gore's telegraph last week. Still no Form 4 sale. LOL

    • Send big Al Gore a thank you note if you are long! LOL

    • Al gore told everyone the q is going to be great -- read on if you missed the news

    • Seymour,
      You can interpret what kreiekenkreiki pasted from wiki and drink up all of his other one line bashing bs here over the last few days or you can use your own critical thinking. The simple answer is that Gore did this the way he did it to extract the tax advantages associated with shifting ordinary income to LTCG. Consider that if he planned to sell out within 12 months (ignoring the 6 month short swing topic), there would be zero advantage to the time shifting and other nuances in this thread.

      But Gore is absolutely not able to "sell the shares whenever he wants".

      The key issue here is about the BUYING AND HOLDING (again see the Form 4 I posted three times for different gumps here who said Gore sold already) of the 59,000 shares. Gore did that for the reasons discussed in many posts here -- shifting the ordinary income piece associated with future appreciation to capital gains treatment and or donating appreciated common stock to charities at the forward (Gore's bet higher) stock price at ordinary income tax rates without having to pay taxes on that appreciation.

      The options provisions under 16b, as modified in many updates, clarify SEC rules on timing associated with insider buying and selling shares acquired from the registrant in the form of options.

      Now let's be clear about his lack freedom to "sell the shares whenever he wants". If he had waited until after the earnings release, yes he could have done a contemporaneous exercise and sale of all or part of the shares acquired without subjecting himself to the 16b sanctions on short swing rules... this is the principal freedom underlying cashless exercises. Here, that is not relevant; he did not wait until after earnings and no, he is not "free to sell the acquired shares at any time", most particularly given that this acquisition of shares was done well past the safeharbor period ended December 25th. Again, none of that matters; Gore's play is for LTCG treatment, and he did NOT sell any stock

      • 1 Reply to squeezetracker
      • ok squeezetracker, I've been working on this for a while, here's how far I have gotten:

        the "transaction code" on gores form 4 is "M"

        transaction code "M" is "Exercise or conversion of derivative security exempted pursuant to Rule 16b-3"

        Rule 16-b prevents profits from purchases or sales for 6 months for directors or officers with unfair information

        16b-3, which is specified in the transaction code, describes the conditions for exemption from rule 16-b

        I am currently studying Rule 16b-3

        was gores transaction considered a "discretionary transaction"?


    • gore is free to sell the shares at any time. these are itm options he has exercised. hope this helps.

      The Basics
      What is the rule?

      Section 16 imposes restrictions on when and how a corporate “insider” may buy and sell shares of
      company stock.

      Who does it apply to?

      “Insiders,” defined as officers, directors, and more than 10% shareholders are covered by the rules.
      What is the impact of Section 16?

      An insider is prohibited from “short-swing” transactions (i.e., a sale and purchase of company stock
      within a 6-month period). The insider is required to surrender to the company all profits if such a
      “matching” transaction occurs. However, employee compensation and benefit plans can qualify for an
      exemption from the rules requiring forfeiture of profits.

      What transactions are exempt from liability?

      There are four basic types of transactions that can qualify for an exemption from liability under the shortswing trading rules of Section 16:
      ■ Discretionary transactions;
      ■ Grants, awards, and other acquisitions from the company;
      ■ Dispositions to the company; and
      ■ Tax-conditioned plans.

      In addition, the exercise of in-the-money stock options continues to be exempt from liability.
      (In-the-money stock options are options where the FMV of the stock on the date of exercise exceeds the
      option exercise price.)

      Reporting Obligations
      Insiders are required to publicly report their holdings and transactions in company stock.

    • Ignore the gumpsters here -- read my multisentence posts on this thread if you are long. You will be glad you did.

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