Kass: The Apple of My Buy
NEW YORK ( Real Money ) -- Similar to many, I historically (let's call it over the last five years) failed to recognize how successful a Steve Jobs-led Apple (AAPL) would be as a disruptive innovator of product.
In my " 15 Surprises for 2012 " (written eleven months ago), however, I waxed enthusiastically about the prospects for the profit cycle and share price for Apple. ( At that time Apple's shares stood at $403 .)
Again, in July 2012, I told a positive tale of Apple's long-term prospects.
Nonetheless, when the shares hit $700 in late September, I turned cautious in " The Bear Case for Apple ."
My concerns were multiple and the major risks (most of which I thought would play out over a few years, not a few quarters) were as follows:
- Global economic weakness in 2013 would likely have an adverse impact on Apple's relatively high-priced stable of products.
Ten days later, in " More Bruises on Apple ," I raised additional concerns. I again asked whether there was anyone left that doesn't own Apple's shares at this point in time and how many money managers (in part because of the weighting in the indices) are now overweight in the stock, particularly after the aforementioned period of outperformance.
Later in October, I underscored why the easy compares and salad days were likely behind this iconic company and that risk/reward seemed uninspiring with the shares being range-bound (and with a lower end of the range at about $550 a share). I concluded that there are now blemishes and bruises on the world's favorite fruit. Specifically, there were early signs of Apple losing its first-mover advantage (and the elevated gross margins previously achieved). I further suggested that investors now must closely watch whether the company's upgrade cycle is lengthening because of a less-differentiated product, they must monitor the ability to deliver a large amount quality product with limited flaws (e.g., apps such as Maps, scratching, Siri, weight/feel, etc.), and they must closely track cost and margin trends and, of course, the competition.