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Apple Stock Jumps on Rumors of Stock Split at Tomorrow's Shareholder Meeting

Hedge fund manager Doug Kass tweeted (via 9to5Mac) a short time ago that he is hearing rumors of an announcement regarding a stock split coming at Apple's shareholder meeting scheduled for tomorrow at the company's headquarters in Cupertino, California. The stock has reversed course since Kass's Tweet, moving from down $5 to up $5.

Many observers, such as Fortune's Philip Elmer-Dewitt, are calling into question Kass's statements, noting the sequence of events that saw him announce a large position in Apple, float the rumor of a stock split, and then announce that he was selling off shares after the stock spiked. Kass has, however, defended his Tweet, saying that the rumors were "all over the Street".

aapl_split_rumor
While a stock split would not add any intrinsic value to Apple's market value, some have viewed a potential split as a positive for Apple under the perception that a company is more likely to split when it is confident that the stock price will rise in the future. Observers have also argued that high stock prices for companies like Apple and Google have kept them from being added to the Dow Jones Industrial Average given the outsized impact they would have on the price-weighted index.

Apple's last stock split came in February 2005, a 2-for-1 move that brought the price of a single share down to just under $45. Apple has refrained from splitting its stock since that time, with investors seeing the share price rise to over $700 before pulling back to the current level around $450.

Top Rated Comments

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23 months ago

If they split it I'm buying it.


In that case I'll sell you 4 quarters for a dollar. All day long. LET'S DO THIS.
Rating: 12 Votes
23 months ago
How is that not stock price manipulation?
Rating: 11 Votes
23 months ago
1. Buy a lot of AAPL shares at a low price.
2. Tweet about a stock split rumor.
3. AAPL's price goes up.
4. Sell shares & PROFIT!!!!

Why didn't I think of that???
Rating: 7 Votes
23 months ago
If they split it I'm buying it.
Rating: 5 Votes
23 months ago

Some people can't afford $450-$700 a share as an investment.


What does that mean, exactly?

Are they not able to buy half the shares at 500 that they would buy at 250 and encounter basically the same result? Does mathematics and physics work differently on their planet?

-or-

Do they not have so much as $500 to their name, in which case they probably shouldn't be trading securities at all.

Proper portfolio allocation and sector diversification isn't really achieved if you have less than $100,000 in funds to invest. If you are in that situation, you're better off participating in an index fund and sitting on it, not just because of risk mitigation (fractionalizing your investment across hundreds of stocks to reduce risk exposure), but also because index fund managers have almost no expense and most indexes tend to consistently outperform the handful of securities that amateurs might be likely to pick. Why play with individual securities if you can sit on an index fund and earn a better return over time?

You're not better off if Apple decides to dilute its per share value because that has no effect on the earnings results of the company.... Buying 20 shares of Apple at $250 is of no additional benefit to you than buying 10 shares of Apple at $500...
Rating: 5 Votes
23 months ago

I have found that this (http://www.investopedia.com/ask/answers/113.asp) is a good explanation about a stock split. It's quite interesting.


That's not what he means. This guy claiming a split is happening could be just trying to get the price to shoot up and sell quick to make a lot of money.
Rating: 4 Votes
23 months ago

In that case I'll sell you 4 quarters for a dollar. All day long. LET'S DO THIS.


Some people can't afford $450-$700 a share as an investment.

$200-$300 is more reachable for those wanting to invest and don't have a lot of money.

The last I heard Apple was a publicly traded company.
Rating: 4 Votes
23 months ago
Erm... +$7 isn't really a "jump". Unless you measure using limp kangaroos.
Rating: 4 Votes
23 months ago
An Apple split? I thought it was a banana split.

I'll be here all week, folks.
Rating: 4 Votes
23 months ago

Avatar,

I may be wrong, but I think last year you were pretty down on Apple's share price and the company as an investment. Do I recall that correctly? And if so, how do you like it at this price? I also recall you had objections about trading based on the P/E ratios. Is that right? I don't recall the argument (I might not have gotten it at the time.) But do these P/E ratios start to get tempting to you? They have to me. A few quarters of performance not too different from how Apple did last year and this stock price is going to look way too low, I think.


Not yet, even on past analysis if we ignore what factors have changed their operating cash flow outlook. My objections weren't solely about Apple's P/E ratio at the time, but about the reliance upon P/E ratios in general.

think about it.... What does a P/E ratio tell you? Does it tell you what the operating efficiency of the company is? No. It tells you two things. Price and Earnings... as if one has any bearing on the other. The only question P/E ratio answers is "How many times in excess of earnings was the market dumb enough to pay for this security?" If the question is: "Should I be only as dumb as the market?" The answer is always "No." So at any given time any P/E ratio will only ever tell you "This is how dumb you shouldn't be." Not "Now is a good time to be this dumb."

It doesn't matter if "comparables" have similar P/E ratios.... Is paying sixteen dollars for one dollar smart? I don't know... but it's never as smart as paying sixty cents for one dollar.

At any rate, that has no bearing one way or the other on my thoughts on AAPL.

In the same time that another person was waiting for Apple to lose the 35% of its share price that it did, just in the hopes of getting on board with it, I had various securities producing positive returns of 25 to 65 percent.

So.... I'm more than content. It's been an absolutely stellar year for me. I don't expect that type of performance to continue so I'm not about to take uncertain/unnecessary risks with the gains I've made.

I'm busy looking for the next thing before someone gets wise to it. The next thing to me doesn't mean "when should I jump on the same old train everybody else is on" but "where's that newer, faster train with the cheaper tickets that nobody knows about just yet."

I don't get nostalgic about investments. Sure, often I look for an otherwise solid company that hit some kind of momentary speedbump in price.... but the margin of safety has to be considerable. Apple's price drop isn't due to one lawsuit or one hiccup in supply chain or one manager who got caught with a hooker... The issue for me is that nothing on their balance sheets or income statements or projected operating cash flow really makes me go "Holy *****, this is a bargain."
Rating: 3 Votes

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