When will AAPL reach $700 per share?

Poll: In which month will AAPL reach $700
Total Votes: 93
March 2012
2
April 2012
17
May 2012
18
June 2012
8
July 2012
17
August 2012
4
September 2012
6
October 2012
11
November 2012
4
December 2012
1
January 2013 or later
5
  • Posted: 20 March 2012 09:43 PM #16

    goubulibaozi - 21 March 2012 12:15 AM

    I have a question involving mutual funds that are restricted to purchasing shares of dividend-issuing companies.

    When can they actually jump in and start building their Apple holdings in their portfolio?
    With yesterday’s announcement?
    Or does it have to be with the board declaration?
    Or after the first dividend is actually paid out?
    I am curious about the technical end of it.

    I am assuming when the board declares it.

    At the same time I wonder if the funds have started to buy calls and thus take positions.

    (And the market makers would begin taking immediate neutral positions but indirectly causing downward pressure on the share price.)

    In other words when would we see downward share pressure as a result of options taken by funds to grab Apple shares? Can anybody enlighten me? TIA

    Every fund is different but most can begin right now.  What prevents them is internal policy and protocol.  Most of these funds do not buy calls as stock surrogates nor do they ever use options as a stock replacement strategy.  Charters are usually very specific about the use of derivatives but for the most part they are allowed to sell covered calls or purchase puts.  The risks are defined and it falls under the “hedge” category.  Anything else can be viewed as speculative.  I would be pretty surprised if they were buying calls to gain exposure. They are very methodical and once the PM decides he/she wants to add the position, there is a meeting called and it goes to the investment committee and decisions are made.  It’s archaic and the amount of red tape is silly—but most funds operate this way. Furthermore, I don’t see any downward pressure from delivering calls to a buyer because (1) that wouldn’t be how they establish a position and (2) in the event someone was buying calls and the market maker was the seller versus a natural seller, there are deltas associated with the calls so it wouldn’t be a one for one hedge for the market maker.  (3) Lastly, if a market maker is selling you a call his hedge is to buy stock - he would dynamically hedge himself with a long (stock) and short (call) in a delta neutral position so I don’t see where the stock downward pressure comes in that you are referring to?
    Is this helpful at all?

    [ Edited: 20 March 2012 10:00 PM by Phoebear611 ]

    Signature

    Keep Calm and Carry On

         
  • Posted: 20 March 2012 10:00 PM #17

    Very helpful. Thank you.

    And now I have a follow-up on Roni’s comment.

    If the fund is restricted to holding a certain upper percentage of any one company in its overall holdings (maximizing its exposure to any one company) would it still be able to hold more in that small percentage Roni mentioned that “outside its mandate”? How likely would that be in practice?

         
  • Posted: 20 March 2012 10:05 PM #18

    Roni can respond but there was a parade of money managers on this week on CNBC and some said they have stringent rules on the percentage of the portfolio a stock can grow to be while others have some flexibility. It is not always an exact science and sometimes it is more of a band than an exact amount.  Also sometimes they just need to get it down before the end of the quarter so they have time to make those sales…it’s not so automatic.  Hope this helps.

    Signature

    Keep Calm and Carry On

         
  • Posted: 20 March 2012 10:09 PM #19

    Phoebear611 - 21 March 2012 01:05 AM

    Roni can respond but there was a parade of money managers on this week on CNBC and some said they have stringent rules on the percentage of the portfolio a stock can grow to be while others have some flexibility. It is not always an exact science and sometimes it is more of a band than an exact amount.  Also sometimes they just need to get it down before the end of the quarter so they have time to make those sales…it’s not so automatic.  Hope this helps.

    I just wrote about a story I either read or heard this past week.  I’ll hunt around for it some, but I imagine I am not the only person who saw or read it

         
  • Posted: 20 March 2012 10:12 PM #20

    Here it is, with a link to a sortable list of funds that hold AAPL

    Do too many fund managers love Apple?

    As we explained in this morning?s Journal, one reason the tech giant?s stock price has fared so well is that Apple has found buyers in nearly every corner of the investment world. This includes (but is not limited to): small-cap funds, mid-cap funds, dividend income funds, international (read: ex-U.S.) funds and even one high-yield bond fund.

    (Our razor-sharp online team has cranked out a sortable table with a list of the mutual funds holding Apple. Play around with it here.)

         
  • Posted: 20 March 2012 10:34 PM #21

    Here is a WSJ article from March 14

    At least 50 small-cap and midcap mutual funds?which focus on small and midsize companies?own Apple, the world’s largest company by market value, according to analyses for The Wall Street Journal by market-data firms Morningstar Inc. MORN -0.07% and Ipreo Holdings LLC. Non-U.S.-focused funds also own it. Apple doesn’t pay a dividend, but about 40 dividend-focused funds hold its stock. And Apple shares can be found even in one high-yield bond fund.

    Apple Shares Are Too Tempting