Nasdaq re-weighting could hurt Apple’s shares

  • Avatar

    Posted: 15 April 2011 03:43 AM #91

    bbbo - 15 April 2011 03:17 AM

    Lots of questions in this thread; far fewer answers (though there are some). Still seems to me that this is a (somewhat) significant issue until we get past it.

    Currently taking a mini-course on investment strategies from a visiting lecturer who’s been at one of the banks for 20-some years and now started his own fund. Somebody asked the question about rebalancing a couple of weeks ago when it first came out. His response was essentially “meh”. In the long run (and even in the medium term) it’s just noise.

    If you have short-term options, play accordingly. It will be especially curious to see the reaction to the earnings report. Shoot up then bid down? Tank then crawl back up? Stay flat?

    Larger issue is that individual investors - and even mutual funds - are still at the bottom of the range of allocations specified for equities (40% let’s say or less). In other words, everyone is still scared. Hard for large caps, especially humongous AAPL, to move.

         
  • Posted: 21 April 2011 09:18 PM #92

    Now that earnings are over, I’m wondering how the rebalance will effect next week’s price movement.

    This overview PDF presentation from Nasdaq is interesting.
    Nasdaq Rebalancing

         
  • Posted: 21 April 2011 10:08 PM #93

    Thanks for posting this.

    Others here disagree with me, but I am buying on the afternoon of May 2nd.

         
  • Avatar

    Posted: 22 April 2011 11:43 AM #94

    capablanca - 22 April 2011 01:08 AM

    Thanks for posting this.

    Others here disagree with me, but I am buying on the afternoon of May 2nd.

    Remember, this 6 to 7 million share trade can take place as early as Wednesday, April 27 or as late as Thursday, May 5 and will occur most likely all at once before any of us even realize it.

    Still believe this is mild short-term noise compared to anything else out there (i.e., iPhone delay rumors, Steve Jobs, etc.).

         
  • Posted: 22 April 2011 12:21 PM #95

    madmaxroi - 22 April 2011 02:43 PM
    capablanca - 22 April 2011 01:08 AM

    Thanks for posting this.

    Others here disagree with me, but I am buying on the afternoon of May 2nd.

    Remember, this 6 to 7 million share trade can take place as early as Wednesday, April 27 or as late as Thursday, May 5 and will occur most likely all at once before any of us even realize it.

    Still believe this is mild short-term noise compared to anything else out there (i.e., iPhone delay rumors, Steve Jobs, etc.).

    If I were a holder of AAPL and faced with having to liquidate a portion on my holdings to be compliant with my portfolio allocations pegged to an index weighting, I would have determined the optimum time to pull the trigger.  Seeing AAPL earnings on the horizon, and a real opportunity that a blowout could produce a price surge, as it did, I would have taken my opportunity to sell a large percentage of that on Thursday.

    Hard to know what caused the stock to steadily ratchet down throughout the day, but one theory could be that we saw more supply of shares than demand of shares due to this.

         
  • Posted: 22 April 2011 12:25 PM #96

    capablanca - 22 April 2011 01:08 AM

    Thanks for posting this.

    Others here disagree with me, but I am buying on the afternoon of May 2nd.

    You and how many others? 

    I tend to think there will be more buyers than sellers given the long anticipation fuse that’s been burning over the past few weeks since Nasdaq announced it.  I also believe the rebalancing story explains, to some degree, the absence of our FQ2 2011 run to earnings (and last week doesn’t count)

         
  • Avatar

    Posted: 22 April 2011 12:38 PM #97

    Mike in Helsinki - 22 April 2011 03:21 PM
    madmaxroi - 22 April 2011 02:43 PM
    capablanca - 22 April 2011 01:08 AM

    Thanks for posting this.

    Others here disagree with me, but I am buying on the afternoon of May 2nd.

    Remember, this 6 to 7 million share trade can take place as early as Wednesday, April 27 or as late as Thursday, May 5 and will occur most likely all at once before any of us even realize it.

    Still believe this is mild short-term noise compared to anything else out there (i.e., iPhone delay rumors, Steve Jobs, etc.).

    If I were a holder of AAPL and faced with having to liquidate a portion on my holdings to be compliant with my portfolio allocations pegged to an index weighting, I would have determined the optimum time to pull the trigger.  Seeing AAPL earnings on the horizon, and a real opportunity that a blowout could produce a price surge, as it did, I would have taken my opportunity to sell a large percentage of that on Thursday.

    Some has occurred no doubt.  However, the EQQ and the QQQ are required to rebalance during the 7-day window that bridges May 2.  No earlier and no later.
    Hard to know what caused the stock to steadily ratchet down throughout the day, but one theory could be that we saw more supply of shares than demand of shares due to this.

         
  • Avatar

    Posted: 22 April 2011 12:41 PM #98

    Mercel - 22 April 2011 03:25 PM
    capablanca - 22 April 2011 01:08 AM

    Thanks for posting this.

    Others here disagree with me, but I am buying on the afternoon of May 2nd.

    You and how many others? 

    I tend to think there will be more buyers than sellers given the long anticipation fuse that’s been burning over the past few weeks since Nasdaq announced it.  I also believe the rebalancing story explains, to some degree, the absence of our FQ2 2011 run to earnings (and last week doesn’t count)

    I’m going to put together a stink bid ladder for this “event”. Will have this ladder in place sometime later next week. Still expecting a mild ramp up early/mid next week.

    Good discussion on PE compression here: http://www.asymco.com/2011/04/21/is-android-responsible-for-apples-deep-market-discount/

      cheers: a trailing PE of 16-18 is the new long term reality
        JohnG[

    [ Edited: 22 April 2011 12:43 PM by johnG ]      
  • Avatar

    Posted: 22 April 2011 01:15 PM #99

    capablanca - 22 April 2011 01:08 AM

    Thanks for posting this.

    Others here disagree with me, but I am buying on the afternoon of May 2nd.


    Go back to the beginning of this thread Capa and you will see that I have always viewed this re-weighting as a positive for Apple/AAPL. I have never waivered in this belief and feel as strongly about it now as I do Apple and its ability to innovate/execute/and deliver the best consumer electronics in the world.

    Welcome to the dark side. LOL

    Signature

    Adversity does not just build character, it reveals it.

         
  • Avatar

    Posted: 22 April 2011 01:16 PM #100

    mbeauch - 22 April 2011 04:15 PM
    capablanca - 22 April 2011 01:08 AM

    Thanks for posting this.

    Others here disagree with me, but I am buying on the afternoon of May 2nd.


    Go back to the beginning of this thread Capa and you will see that I have always viewed this re-weighting as a positive for Apple/AAPL. I have never waivered in this belief and feel as strongly about it now as I do Apple and its ability to innovate/execute/and deliver the best consumer electronics in the world.

    Welcome to the dark side. LOL

    Ah Star Wars…“when 300 years you reach, look as good you will not.”

         
  • Avatar

    Posted: 22 April 2011 01:33 PM #101

    madmaxroi - 22 April 2011 04:16 PM

    Ah Star Wars…“when 300 years you reach, look as good you will not.”

    900 years

    Impressive. Most Impressive. But you are not a Jedi yet.
    :-D

    Signature

    The only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. — Steve Jobs

         
  • Posted: 08 August 2011 12:01 AM #102

    Debated where to post this or even whether to post it.  It is from the Schwab news summary.

    With Kraft (NYSE: KFT) splitting into two companies, it could be pulled from the popular stock average.

    In a statement to CNBC this morning, John Prestbo, Editor and Executive Director of Dow Jones Indexes, said, “We are aware of the situation and we will watch it. It’s a corporate action and it will take some time to come to fruition. We’ll take action when appropriate.”

    Apple (Nasdaq: AAPL) is considered the favorite as the next Dow competent, but with tech already widely represented in the average by Cisco (Nasdaq: CSCO), Microsoft (Nasdaq: MSFT), IBM (NYSE: IBM) and Intel (Nasdaq: INTC) it would seem unlikely they will replace Kraft, a food maker, with Apple.

    Google (Nasdaq: GOOG) could also easily be added, and may skirt the “not another tech” problem since it could be classified an “Internet.” You can also make a case about Amazon.com (Nasdaq: AMZN), which covers “Internet” and “Retail.”

    In keeping with the same sector, Pepsi (NYSE: PEP) could make a nice addition. Also, General Mills, Inc. (NYSE: GIS) or Kellogg Company (NYSE: K).

    The Dow could also just keep the larger part of Kraft in the average.

    Apple investors may be praying to keep their precious stock out of Dow, which has been viewed as the “kiss of death” in many instances (think CSCO, INTC, MSFT).

    As I have stated too many times, I don’t favor the idea of my AAPL being added to the DJIA.  It is manipulated enough already.

         
  • Avatar

    Posted: 08 August 2011 03:34 AM #103

    While it’s true the Dow is not really where I’d want AAPL to be…at all, AAPL is a fundamentally different company from all of the Dow’s components.  And it’s not like AAPL can appreciate at a much slower pace than currently on its ridiculous growth.

    Signature

    The Summer of AAPL is here.  Enjoy it (responsibly) while it lasts.
    AFB Night Owl Teamâ„¢
    Thanks, Steve.