Apple (Nasdaq:AAPL) has dropped like a stone since it touched $700 per share just before the i5 launch. Recently they missed revenues. The investing world is appalled that this iconic stock would mis-behave on such a massive scale. Investors in Apple have forgotten there is risk in the market.
So taking a line from Rudyard Kipling “If you can keep your head while others…” is Apple providing the much sought after entry point that deep value investors prefer.
All deep value decisions are framed in a buy ugly sell pretty context.
If you look at the fundamentals Apple still has an enormous cash hoard which even hedge funds find hard to comprehend. They can weather many a storm and buy their way out of many a problem. Sounds good right.
Apple is still a dominant player in the smart phone market. Maybe Samsung and others have improving compelling offers, but Apple is not on its hands and knees. Still sounds good.
Where investor thinking must change is “Apple is no longer God” Apple has many competitors in many product lines. Valuations for Apple must be on the basis of competition within a cut throat global market place.
So the Apple Narrative has changed. It’s divine status has been lost. It is now a huge mega cap company which must earn its keep. behavioural investing problems will abound. Investors will need to change their perspective.
Many a hedge fund has been knee capped. They all rode over the cliff as a herd. So much for proprietary analysis and independent thinking. Do you really need to pay 2/20 to gain exposure to Apple. We all know what the answer is.
Deep value investors need that huge moat. Apple’s moat is no longer as intimidating. As a side comment most leading edge technologies usually lose their protective moat. So it’s not surprising that Apple lost theirs.
No Apple is not a deep value play. There is no turnaround or fix that comes to play. Basically Apple lost a star running back and cannot gain yards the way they used to. In Vegas the spread narrowed. Thats all.