How many articles and blog posts about Apple (Nasdaq:AAPL). The conversations in the investor marketplace come down to two solitudes which have yet to resolve.
There are those who focus on Apple as a growth company. constant product innovations. Constant increases in revenues and profits. It’s all so damn sexy. New iPad. New iPhone. Apple is the one to beat. Samsung has a compelling offering and may take share so load up on the market place news.
Then there are articles on the dividend. The tone is how boring that Apple pays a dividend and therefore supports price because of yield. Boo Hoo how sad but that is what a dividend is supposed to do.
Apple investors are in a transitional frame of mind. Is this a sexy growth company or do the dividend investors start to pile in. The dividend investor buys because they believe in the financial metrics. The growth investor buys because they believe in the next generation of product offerings. Two very different orientations.
So what of it?
The growth investors have the greatest psychological risks. They are anchored in their perspective of Apple being exciting and growing in leaps and bounds. They will seek and receive confirmation with product announcements. When the news cycle lessens in intensity they will become discouraged and find less reason to hold or increase positions. Sell buttons get punched.
They forget what a dividend investor is anchored to which is yield. So if Apple is on your watch list as a dividend investor watch the frenzy cycle. There will be buying opportunities disguised a growth investor sell offs.
This battle will go back and forth several times before the growth investors lose their anchor when they have lost enough of their money.
George Gutowski writes from a caveat emptor perspective.
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Buffett has made big bucks with his $5 billion specials. Berkshire Hathaway (NYSE:BRK.A) Always a similar structure. Pref shares with a very decent coupon that pays you to wait plus warrants for that risk adjusted Venture Capital big score gain that you really want. But every time Buffett does a deal like this it identifies a weak company that is a little bit desperate. Because the true value play is so long-term the market will play short and sell off. Look at the problems Bank of America has (NYSE:BAC)
The buy ugly sell pretty business has implications for both sides of the transaction. Being a Buffett investment does not have the cachet it once did. OMG they identify themselves as such in their corporate branding.
Disclosure: George Gutowski writes from a caveat emptor perspective. Buy ugly sell pretty is a tough way to make a buck. Everything looks ugly these days. I hold no positions in stocks mentioned in this post. I have no plans to initiate new positions within the next 72 hours.
American Association of Individual Investors www.aaii.com had an interesting commentary on the Warren Buffett Bank of America (NYSE:BAC) preferred share deal. The press is full of stories as to how Warren Buffett is under water. Charles Rotblut, CFA AAII Journal Editor patiently explains the advantages that Warren Buffett has and by extension why he does not care what happens on a day to day basis.
Value investing is all about buy ugly and sell pretty. Buffett is powerful enough to construct his own investments and create the perfect scenario. The merely rich still need to buy off the shelf.
Disclosure: George Gutowski writes from a caveat emptor perspective. Warren Buffett did not cut me in for a piece of the deal. I do not hold positions in stocks mentioned in this post. I do not have plans to initiate new positions within the next 72 hours.
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Berkshire Hathaway (BRK.B) confused investors with large-scale write downs resulting from derivative contracts. The fundamental value investor Warren Buffett who buys when all others sell, does not seem to be able to get around the accounting rules. Not trying to take a shot at the master. But we need to understand how much of the earnings statement may be affected by derivatives and how much is attributable to good old-fashioned businesses with recurring profits and cash flow. Berkshire seems lost in the fog.
Disclosure: No position in any stocks mentioned in this post.