The Mac Observer’s Apple Finance Board members did a better job of pegging Apple’s numbers ahead of Tuesday’s earnings report than the pros on Wall Street, according to Fortune magazine’s Philip Elmer-Dewitt. In a piece that rounded up the pre-announcement estimates, Fortune said that the amateurs nailed it, while The Street blew it, and our AFB members lead the way.
Looking at the numbers for revenue, earnings, gross margins, and unit sales, Mr. Elmer-Dewitt wrote, “The unaffiliated analysts took 9 out of the 10 top spots. The bottom 20 spots were all held by professionals working for the banks and brokerage houses.”
Of those nine, four are members of our AFB: #1 (Patrick Smellie), #3 (Alexis Cabot), #7 (Robert Paul Leitao - AKA DawnTreader) , and #9 (Jeff Fosberg). Another AFB member, Mark Beauch, came in at #21. The highest ranked pro was Yair Reiner of Oppenheimer, at #10.
Charles Wolf, a well respected analyst who has long followed Apple and was among the few during Apple’s darkest days not to insist that Apple stop making hardware and license Mac OS/Mac OS X, was a surprise (to us) last place, at #41.
The Apple Finance Board has long been one of the most active forums for AAPL investors, attracting a number of highly capable day traders and other serious investors. We’ve long known that it is frequented by analysts and mainstream reporters, but Mr. Dewitt’s piece is the first time we’ve seen our members publicly acknowledged in a ranking such as this.
We should note that there are differences in the roles played by AFB members and the other amateur analysts listed in Fortune’s article. AFB members are usually active AAPL investors who follow Apple closely and want to be as accurate as possible when working out their estimates.
The pros, on the other hand, are finance wonks who do not (and can not) own stock in the companies they follow. In addition, they follow multiple companies and they make their money by advising their clients on how each of those companies will be performing.
Of course, some analysts simply don’t understand Apple and its whole widget business model, and thus have no real clue what the company is about. This is a shortcoming not suffered by AFB members.
In addition, Apple isn’t the only party that likes to be conservative with its estimates. There’s little upside for an analysts who is over-optimistic with his or her estimates, and Apple own estimates are far more conservative than Wall Street’s.
Still, there’s conservative, and there is just flat out wrong. In Fortune’s ranking, the top nine (all amateurs) ranged from a 2.44% error rate to 4.67% and all 11 amateurs had average error rate of 3.94%. The pros had an average error rate of 9.04%, and that represents a vast gulf between the two groups.
As we noted above, we at TMO (and our forum members, too) have long known that pros from the outside and mainstream journalists lurk in the AFB, and there are many other Web sites where knowledgeable traders hang out to discuss stocks and strategies with other amateur (and serious) investors.
Mr. Elmer-Dewitt’s spotlight on their success at estimating Apple’s performance will no doubt heighten the attention on these sites, including our Apple Finance Board.
In the meanwhile, we’d like to congratulate our AFB members for being recongized by Fortune.