Mr Market unimpressed with Apple – Biznews Global portfolio buys more
Amazing how quickly things can change in today's world.
In last month's newsletter we pointed to the looming crisis in Greece and concerns at a sliding Shanghai stock market. Four weeks later and we can look back on Greece narrowly avoiding a real tragedy and a Chinese market that has experienced a bona fide Crash, with all the panic that entailed.
July is also one of the four big "results" months for US stocks, a period when many of its major companies deliver their latest quarterly financial results. Mr Market was at his manic-depressive best – hating and loving the numbers from the world's number one and two in terms of market cap.
Despite Apple Inc delivering a record profit, accelerating its share buy-back programme and reporting a cash pile surpassing $200bn for the first time, Mr Market was unimpressed.
He focused, instead, on the slow take up of the Apple Watch and an overly critical interpretation of iPhone sales (which came in just below the market's "target"). That resulted in an astonishing $65bn in market value being wiped off Apple stock in the wake of the release of its numbers.
We used the opportunity of the price decline to invest another 8% of the Biznews Global Share portfolio into Apple Inc at its now depressed level of $121.50 a share. At that price, there's a 15% margin of safety on our assessment of the company's intrinsic value. We now have 15% of the funds invested in each of Apple, Google and Berkshire Hathaway – the anchors of our portfolio. Fortunately for the portfolio's overall performance, Mr Market got all giddy at Google's quarterly results, sending the share price soaring and adding an equally amazing $65bn to its market cap. Major reason – believe it – was a belief that the new Financial Director Ruth Porit is going to keep Googlers from spending too much. The big swing in valuations of Apple and Google after their results tells us two things: if you like volatility (we don't) it's not necessary to look for it in small stocks; and the benefit of having a well structured portfolio is your swings tend to take care of the slides.
Eight months since inception, our portfolio has achieved an annualised return of 29%. Hope you aren't among those who missed out.
When you get some free time, go have a watch of the July webinar
It was another cracking month for our model portfolio with the share prices of Google and Amazon catching fire after the release of quarterly results. If you missed the half hour webcast, click on the link above to watch – you'll also find the full transcript there with all the relevant graphs. And please do try to join us for the next portfolio update – diarise Wednesday 19th at 12:30.
From Biznews – July's best read Global Investment articles
Well, they did for a while. But once reality of life outside the EU prevailed, the young Prime Minister Alexis Tspiras managed to enlist the support of some opposition members to vote through an even tougher package than the one that had previously been offered.
One of those deeply researched articles that confirms rational thinking – that no matter how much authoritarian regimes dress things up, central planning is no match for the ingenuity of the free market. Simon Evenett's insights have obvious implications for global investors – stay with the winners.
The world's biggest Emerging Markets investment personality was scathing about the intervention of the Chinese authorities during the Shanghai market Crash. It did more harm than good – and has serious long-term implications.
Here is the fascinating inside story of Japanese media group Nikkei's acquisition of the Financial Times of London – swooping at the last minute with a knockout offer after its German rival Axel Springer had spent months wooing the British newspaper.
The new Barclays chairman John McFarlane is far from sugar and spice, but his hard approach worked out really well for investors in Aviva Insurance – and could be nice for Barclays shareholders too.
An interview to catch up on:
This is the third time I've gotten to spend some time with the world's best-selling money writer. You're sure to enjoy the half hour of his insights that range from his inspiration "Bucky" Fuller through to a spontaneous endorsement of RW Johnson's book that suggests SA has only two years of relative comfort left (as if you needed another reason to invest offshore……) Watch it or read the transcript by clicking on the heading above.
And don't forget to visit the dedicated Global Investing section of Biznews.com updated daily for the freshest news of investment opportunities available outside of South Africa.
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