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$600 Billion In Trades In Four Years: How Apple Puts Even The Most Aggressive Hedge Funds To Shame

Tyler Durden's picture


Everyone knows that for the better part of the past year Apple, Inc. ("AAPL", or "The Company") was the world's biggest company by market cap, with Exxon finally regaining that title on Friday, following AAPL's latest price drop in the aftermath of its disappointing earnings. Most know that AAPL aggressively uses all legal tax loopholes to pay as little State and Federal tax as possible, despite being one of the world's most profitable companies.

Many also know, courtesy of our exclusive from September, that Apple also is the holding company for Braeburn Capital: a firm which with a few exceptions (Bridgewater; JPM's CIO prop trading desk) also happens to be one of the world's largest hedge funds, whose function is to manage Apple's massive cash hoard, with virtually zero requirements, and whose obligation is to make sure that AAPL's cash gets laundered legally and efficiently in a way that complies with prerogative #1: avoid paying taxes.

What few if any know, is that as part of its cash management obligations, Braeburn, and AAPL by extension, has conducted a mindboggling $600 billion worth of gross notional trades in just the past four years, consisting of buying and selling assorted unknown securities, or some $250 billion in 2012 alone: a grand total which represents some $1 billion per working day on average, and which puts the net turnover of some 99% of all hedge funds to shame!

Finally, what nobody knows, except for the recipients of course, is just how much in trade commissions AAPL has paid over the past four years on these hundreds of billions in trades to the brokering banks, many (or maybe all) of which may have found this commission revenue facilitating AAPL having a "Buy" recommendation: a rating shared by 52, or 83% of the raters, despite the company's wiping out of one year in capital gains in a few short months.

The Perfectly Legal Tax Evasion Scheme

Apple's massive cash hoard is something that gets its 15 minutes of fame each and every quarter, because for now at least, it keeps growing and growing and growing. However, that is not exactly correct. In fact, the company's cash and cash equivalents at December 31, 2012 is just $16.2 billion: barely $9 billion more than it was 4 years ago, on December 31, 2008. Where the bulk of AAPL's profits are kept, however, is not in cash and equivalents, but in various undisclosed short- and long-term securities.

It is these, and particularly the latter, that have soared in a near parabolic fashion in the past 4 years. As the chart below shows, while cash and short-term marketable securities have been virtually flat for the better part of the past 16 quarters, it is the long-term marketable securities that have exploded from just $2.5 billion to a whopping $97.3 billion.

So why does AAPL funnel its profits in a fashion that redirects it to investments instead of domestically hoarded cash? Simple: to take advantage of offshore venues which allow it to avoid paying any tax on the cash that gets redirected for trading purposes. As per the company's filings, of the massive $137.1 billion in cash and investments AAPL has access to, a near record 68.7%, or $94.2 billion, is held offshore.

The chart above means that contrary to popular disinformation, AAPL "only" has ready access to some $43 billion in domestically held cash for corporate purposes such as dividends, stock buybacks and local M&A. The rest of the cash is essentially in offshore lockboxes, which are non-recourse for domestic corporate purposes, absent repatriation. And herein lies the rub. From the latst 10-Q:

As of December 29, 2012 and September 29, 2012, $94.2 billion and $82.6 billion, respectively, of the Company’s cash, cash equivalents and marketable securities were held by foreign subsidiaries and are generally based in U.S. dollar-denominated holdings. Amounts held by foreign subsidiaries are generally subject to U.S. income taxation on repatriation to the U.S.

Apply a 30% tax to the offshore holdings and suddenly one can see why broad statements that AAPL has some $130/share in cash are largely meaningless: if AAPL wishes to have full access to dispose with this cash as it saw fit, it would first have to pay Uncle Sam some $30/share in cash before it had full recourse.

So why does AAPL chose to have cash stock up offshore instead of being able to dispose of it? Simple, and logical. Taxes, or rather the lack thereof.

The chart below shows that while AAPL has generated some $136 billion in operating profits in the past four years, the amount of cash taxes it has paid, as per the company's cash flow statements, has been a grand total of $18.6 billion: a 13.6% effective tax rate. And this $18.6 billion also includes taxes paid in offshore venues, so realistically the cash taxes paid in the US are likely well under 10% of profits.

The same on a quarter by quarter basis: operating income grows, cash taxes paid stay the same:

But far form us making an ethical claim here: AAPL is merely following the same legal loopholes that are available to all, yet made a mockery of the tax shelters used by recent presidential candidates. Perhaps one should ask Congress why these laws are there in the first place to allow the same companies that spend millions on lobbying members of Congress to retain billions in unpaid taxes via various tax shelters: a rather amazing IRR, if only for the corporations involved.

None of the above is news, and AAPL's aggressive use of tax loopholes has been known for years.

What has not been known is just how the cash from the company's seemingly endless profits gets moved from the Income Statement to the Balance Sheet: profits, which until recently were assumed would grow in perpetuity, until something strange happened: Samsung became cooler and faddier than AAPL, which coupled with accelerated margin erosion at AAPL grappling with an end-consumer who has increasingly less disposable cash flow, has led to a drubbing of the stock to new 52 week lows.

A Hedge Fund On Stroids

The conventional wisdom of Apple, and by implication of Braeburn, is of a boring old shop which invests its money prudently and cautiously in ultra-safe securities.

This is what AAPL itself has to say about its allocation of capital. From the just released 10-Q:

The Company’s marketable securities investment portfolio is invested primarily in highly-rated securities and its investment policy generally limits the amount of credit exposure to any one issuer. The policy requires investments generally to be investment grade with the objective of minimizing the potential risk of principal loss.

Good but... "primarily" and "generally"? One doesn't have to be an MF Global and JPM London Whale fallout expert to know that Jon Corzine's or Jamie Dimon's (or any other prop trading institution for that matter), was "primarily and "generally" supposed to be invested in highly-rated securities whose objective was avoiding risk and loss. Until it was uncovered they aren't. And as we explained previously, when we dissected AAPL's arm's length asset manager Braeburn, there is little more out there:

Braeburn has no reporting obligations: there is no Investment Advisor Public Disclosure (IAPD) entry on Braeburn for the logical reason that it is not an investment advisor: it merely manages an ungodly amount of cash for AAPL's millions of shareholders. There is also no SEC filing 13-F filing on Braeburn's holdings. As such, not confined by the limitations of being a "long-only", it is in its full right to hold any assets it feels like, up to and including CDS on housing, puts on Samsung, or Constant Maturity Swaps that pay if the 10 Year collapses. It just doesn't have to report any of them.

Nobody knows: and that's the beauty of Braeburn. It is the world's largest hedge fund that is not really a hedge fund, nobody has heard of, and nobody knows just what assets it holds.

Indeed nobody does know just what goes on behind the door of Suite 225 at 730 Sandhill Road in Reno, Nevada where Braeburn in situated. However, one can extrapolate some rather curious things.

Such as that starting December 2008, and through December 2012, according to its own filings, AAPL has bought and sold a grand total of $600 billion in "marketable securities", of which the sales alone amount to a whopping 205 billion!

What is not shown above is that over the same period, maturities on AAPL's ever-growing portfolio amount to some $82 billion. In other words, between maturities and sales, AAPL has generated nearly $300 billion in cash for investment and reinvestment purposes.

Shortening the time frame somewhat, just in 2012 AAPL's gross trading on its securities holdings amounts to a whopping $250 billion, or nearly $1 billion for every working day of the year: an amount that would put the turnover of some 99% of the most active daytrading hedge funds in the US to shame!

What is very curious is that even as AAPL's overall portfolio rose and rose, with purchases "primarily" of supposedly safe investment grade securities, an amount which has peaked at $121 billion as of December 31, 2012, the actual quarterly maturity of AAPL's portfolio, or the natural roll off, has decline to a near record low, or just 2.9% of total. How it is possible that the quarterly maturing notional continues to decline even as the portfolio, of both short- and long-term securities grows, is frankly, beyond our meager comprehension skills.

What is even more curious is that AAPL can't even make the excuse that it is merely churning its short-term marketable securitie. As the chart below shows, beginning in March 2011, the total amount of sales and maturities exceeds the quarterly total holdings of short-term securities, which naturally implies that a substantial portion of the long-term securities is also being sold.

So why would AAPL engage in what increasingly appears to be not only active portfolio management, but extremely aggressive and overzealous portfolio management, one which includes massive trades - buys but more importlanly sales - on a day to day basis?

Said otherwise: why is the world's premier maker of gizmos also one of the biggest under-the-radar day traders of unknown securities nobody has ever heard of?

* * *

We don't know the answer to these questions. We do know however, that if one is indeed engaged in plain vanilla money management, such as investing in ultra safe investments, there would be no need of such aggressive purchases and dispositions of securities.

In fact, adding the simple average of the short- and long-term marketable securities holdings of AAPL over the past 4 years amounts to some $59 billion. Yet, as noted above, the total amount of gross trades -buys and sales - over the same period is $600 billion, or a total portfolio turnover of some ten mindboggling times!

This is hardly what one would call boring investing in safe securities, and certainly something one would call aggressive to quite aggressive money management, one that not even some of the world's most successful hedge fund managers are equipped or willing to do.

Yet Braeburn Capital, a/k/a AAPL, has been doing it for the past 4 years, and does so to the tune of $1 billion per day.

* * *

Finally, there is the minor question of who exactly is it that executes these trades, or, in other words, which are the banks that have pocketed billions in commissions on AAPL's furiously traded portfolio?

We don't know, but we wonder: could it be the same banks that come rain or shine, gave AAPL a Buy rating, one which is still held by some 52 of the 63 banks covering the company, among which naturally are the most prominent brokers of "investment grade" securities:

Perhaps it would be very informative one day, years after the AAPL craze is long gone, to inquire just how much money AAPL paid out to any/all of the banks listed above in the form of trade commissions and other forms of "soft dollar" compensation. After all, any client which has conducted some $600 billion in trades in the past 16 quarters is known by one word at every single bank: "dream."

And parallel to that, one wonders what AAPL's total profits would have been and thus total marketable securities holdings, how much less the total trading churn and commissions to the sell side would have been had the downgrade battery started long ago, and thus broken the hypnotic and very much reflexive relationship between the world's most profitable company and its "coolness" factor, which in a feedback loop made it sell more products, making its market cap bigger, making its securities holdings larger, and making sellside profits greater, and so on ad inf... until one day it all snapped.

* * *
The point of the above analysis is not to take away from the operational side of the business: the fact that AAPL created and dominated the smartphone and tablet sector for years is undisputable. Yet now that many challengers are emerging, both new and old, both premium and commoditized, more and more attention is shifting to AAPL's balance sheet, and the main asset thereon: the company's cash and marketable securities.

The point of the above analysis is to show that when it comes to said cash and marketable securities there is much more than meet the superficial eye, and certainly much, much more than just a summary assessment that "AAPL has nearly $140 billion in cash so it has to hand this cash out to investors."

If there is one thing that the above should have made quite clear, it is that just as the AAPL product ecosystem is supposed to ensnare customers into always and only buying AAPL products, so the AAPL's portfolio management "ecosystem" may have made it impossible for AAPL to break away from what is now 4 years of uber-aggressive asset management in the vein of some of the world's most aggressive investors.

And that any hopes for a quick and easy disposal of cash to the benefit of shareholders may well not be coming any time soon.

* * *

Finally, a tangent: if indeed AAPL is invested in plain vanilla fixed income securities, as it reports, amounting to well over $120 billion which have a DV01 in the tens if not hundreds of millions, and if indeed, the great rotation from bonds into stocks has begun, AAPL, which many have jokingly called Fed-lite will suddenly develop a very, very big headache: how to dump over a hundred billion in debt in a market that suddenly has gone if not bidless, the bidweak.

Because while the Fed can print its own liquidity, AAPL, well, can't...

Source: AAPL public filings


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Sun, 01/27/2013 - 21:40 | 3190013 Aziz
Aziz's picture

All that cash may not be a cushion. If invested wrongly — as this post strongly suggests — AAPL's cash may turn out to be an incendiary device. A 2008-style derivatives detonation may turn AAPL into the next AIG.

Sun, 01/27/2013 - 21:52 | 3190039 Honest_Money
Honest_Money's picture

Take the cash and buy real, physical gold and silver bullion.  Problem solved.

Sun, 01/27/2013 - 21:59 | 3190063 Boris Alatovkrap
Boris Alatovkrap's picture

When Boris is lots to cash, like indulgence for high tech gadgets. Boris is really really want iPhone. Maybe Apple is to buy iPhones with extra cash!?

Sun, 01/27/2013 - 22:24 | 3190130 Zer0head
Zer0head's picture

good thing Apple isn't evil... sorry that's google..ah but WTF they're both Asspirational companies

Sun, 01/27/2013 - 23:22 | 3190238 Muppet Pimp
Muppet Pimp's picture

It is also at minimum interesting that the Apple logo (Apple with a bite out of it) symbolizes the original sin

and that the colors of the Apple symbol became known as the gay flag (it was just Apple prior to that recognition)

and that Steve Jobs had no problem with using slave labor to produce his products (while wholly unnecessary, certainly confirms Steve's contempt for Americans) even in times of great distress for his own country,

and that other loosely related communist entities such as the NY times sought to declare the founders of our country such as Thomas Jefferson evil ( while they lived in such times where slavery could more or less be seen as a normal way of life (TJ did not invent it, and tried to end it, but lost out to the NY lobby).

the very same entities (NYT) would celebrate such modern day slavers (while wholly unnecessary, they simply used slaves to make massive profit margins) as shown here:

But don't you worry, the New York times with their crack economist staff will quickly correct any misperceptions regarding what is right an wrong.  What is right is obviously that they shall spend as much as they can fathom and jerk offs like Paul Krugman shall assure them that it is never enough, and how dare you ever question these elites.  They have a bunch of indoctrinated imbeciles at their disposal that will refute any calls for restraint as their shall be no restraint for .gov is our saviour and can in fact do no wrong. 

And this shall be the reason all southern folks shall draw arms and prepare to fight off these evil tyrants for we know better than to believe in their lies.

Stay up north Krugman for yoiur own good.  If we find out you make it down here, we willl teach you what the South is all about you worthless POS.

Sun, 01/27/2013 - 23:30 | 3190283 economics9698
economics9698's picture

A bit of advice, wait until the fiat dies, a few years at best, then raise arms. The moral of the army declines rapidly when they have no food or money.

Sun, 01/27/2013 - 23:43 | 3190323 Freddie
Freddie's picture

Drudge has a link to the NYT pimping the stock market for ma and pa investor.  Now is the time to jump in rubes.  It is the most disgusting Operation Mockingbird propaganda.  The responses are even worse.  "The stock market is the best-est-est thing in the whole wide world - ever."  Sick.   

Mon, 01/28/2013 - 00:16 | 3190398 Dr Benway
Dr Benway's picture

Vanilla Ice: "If you can buy a house cheaper than you can build it, it's great. Look at the stock market. It's all going up ... No better time to get in than right now."


In Australia the situation is even worse. The largest newspaper, Sydney Morning Herald, now has its property and business sections "sponsored" by major real estate and banking players. It has become, without using exaggeration, the marketing arm of the banksters.


Mon, 01/28/2013 - 00:39 | 3190459 NotApplicable
NotApplicable's picture


Mon, 01/28/2013 - 07:14 | 3190781 Comay Mierda
Comay Mierda's picture

exactly.  Braeborn is prob the biggest AAPL option dealer and has the cash to manipulate the stock any way it wants to profit off its options

Mon, 01/28/2013 - 02:34 | 3190610 ss123
ss123's picture

I've taken Vanilla's investing advICE, vICE, baby... and made millions!

Mon, 01/28/2013 - 02:22 | 3190529 TWSceptic
TWSceptic's picture

I hear the same arguments from braindead christians and commies.

Sun, 01/27/2013 - 23:27 | 3190275 economics9698
economics9698's picture

Impressive breakdown of the company.  Pretty slick imo.

Mon, 01/28/2013 - 08:43 | 3190870 pemdas
pemdas's picture

If a hedge fund buying one week or one month T-bills your yearly turn over is going to be huge.  So what's the big deal here?

Sun, 01/27/2013 - 23:21 | 3190230 SafelyGraze
SafelyGraze's picture

"Maybe Apple is to buy iPhones with extra cash"

is one of mystery for two column of balance sheet regard to principle of accounting whether iphone is asset or is liability of apple company

spoilage: replacing iphone with dollar and apple with federated reserve

Sun, 01/27/2013 - 23:48 | 3190337 Freddie
Freddie's picture

Maybe Apple is channel stuffing by buying their crap in China and shredding it or dumping it in the Pacific.  The probably day trade and make $50 million a day extra to buy up their iCrap.  I really hate them even more after Tyler's excellent article.  F Apple! 

I felt a little sorry for Jobs until I read this and all the FoxConn misery and other dishonest crap Apple pulls.  They are as slimy as GE, IBM and Halliburton.

Sun, 01/27/2013 - 23:47 | 3190336 IllusionOfChoice
IllusionOfChoice's picture

If the turnover on their holding has dropped off, doesn't that imply they could have move into longer term strategies like precious metals?

Mon, 01/28/2013 - 01:18 | 3190521 rotagen
rotagen's picture

People are really really dumb.  Find out what dumb people are doing and do it when they start doing it.  Stock market success !

Sun, 01/27/2013 - 22:24 | 3190014 francis_sawyer
francis_sawyer's picture

Has Blythe been informed of this?

Sun, 01/27/2013 - 22:41 | 3190169 unrulian
unrulian's picture

they're probably shorting much is in an i-pad/phone/mini/fad/apple?

Sun, 01/27/2013 - 21:44 | 3190023 rguptatx
rguptatx's picture

"The chart above means that contrary to popular disinformation, AAPL "only" has ready access to some $43 billion in domestically held cash for corporate purposes such as dividends, stock buybacks and local M&A. The rest of the cash is essentially in offshore lockboxes, which are non-recourse for domestic corporate purposes, absent repatriation. And herein lies the rub. From the latst 10-Q:"

Are you kiddding me? Show me another company that has access to "only $43B in doestically haeld cash", pluse a lot ore held in overseas (Bermuda / Bahamas / ???) - ftf (fuck-the-fed)

Sun, 01/27/2013 - 21:59 | 3190061 Freddie
Freddie's picture

Lockboxes?  LOL!  Al Gore, who is on Apples board or was, wanted to "lockbox" Social Security.    Apple is so dirty.  Money offshore, HFT trader, slave labor yet it is loved by lefty hipsters and tards.   Apple are also tax dodgers like Warren Buffet and Bono/U2.

They type out social justice and equality bullshit on their iMacs and iPads. What hypocrites!

Mon, 01/28/2013 - 08:25 | 3190843 pies_lancuchowy
pies_lancuchowy's picture

either 'social justice' is the same as 'justice' , or it is not.

If it is the same, then why use the word 'social'? Waste of space. Let's just write 'justice'.

And if it is NOT exactly the same - then , something that is NOT justice, is called INJUSTICE.

Sun, 01/27/2013 - 21:44 | 3190024 fonzannoon
fonzannoon's picture

i thought we all moved on to netflix?

Sun, 01/27/2013 - 22:04 | 3190084 knukles
knukles's picture

Well we know the SEC is way the fuck past that, now, don't we?

Where ya' goin', Fred?
Men's room.
Ah, tablet, tranny and tissue time, eh?

Sun, 01/27/2013 - 21:48 | 3190028 Capitalist
Capitalist's picture

It's obvious. A technology company with massive trading turnover a day... HFT.

Sun, 01/27/2013 - 21:49 | 3190033 fuu
fuu's picture

Umm, wtf.

Sun, 01/27/2013 - 21:52 | 3190040 Freddie
Freddie's picture

Al Gore's on Apple's board - they are pure as the driven snow.  What a corrupt f***ing company Apple is.  I don't listen to Limbaugh the few times on listen to anything in the car. He pimps Apples crap all the time and the scum in the NFL.  Apple probably HFT it's own stock.

Apple is a real lefty outfit as well. They appear to be frontrunning everyone. 

Sun, 01/27/2013 - 22:00 | 3190071 knukles
knukles's picture

Al Gore and snow?

Sun, 01/27/2013 - 22:19 | 3190115 NoDebt
NoDebt's picture

Yeah, does make you wonder how much of their own stock their in-house HFT trading desk traded in (long, or perhaps short, as the case may be recently).  If you ask them the answer would be "none", obviously.

Sun, 01/27/2013 - 21:54 | 3190043 Midas
Midas's picture

Is it possible for Braeburn to buy Apple stock on the side?  Or, ahem, short it?

Sun, 01/27/2013 - 21:58 | 3190060 jballz
jballz's picture

A proper hedge fund would be short apple out the ass. And yes they can, it is called executive hedging. It is done all the time and legal.

But I doubt they bothered, probably flipping penny stocks for their brothers in laws dog.

Sun, 01/27/2013 - 21:55 | 3190044 Freddie
Freddie's picture

Apple - the Stevie Cohen of the computer world.

Sun, 01/27/2013 - 21:55 | 3190045 fonzannoon
fonzannoon's picture

Schiff: "I don't know why we give Lance Armstrong such a hard time. We have the lance Armstrong economy. We ought to put his image on our money."

Sun, 01/27/2013 - 22:28 | 3190139 The Shootist
The Shootist's picture

Epic zinger.

Sun, 01/27/2013 - 21:55 | 3190047 jballz
jballz's picture

Churn and burn baby.

I bet it is like this. Jobs set the thing up, too busy tinkering with gadgets to care much about the cash hoarded. Managers won the powerball of all time, trade that shit up. Commissions all around, party like its y2k.

I bet their fiduciary oversight is fucking zero. No cloak and dagger here just good old boys and the mother lode of dumb money. Apple shareholders.

Scandal coming... Guaranteed. Ponzi in there somewhere.

Sun, 01/27/2013 - 21:59 | 3190065 knukles
knukles's picture

They'd be held to what ever level of conduct management desires.
Probably mere reasonable efforts.  Which in today's world means whatever pleases the boss, period.

Sun, 01/27/2013 - 22:22 | 3190107 fonzannoon
fonzannoon's picture

there is an article in the NYTimes about the fed debating whether to slow asset purchases. the comments section is really interesting for a Lib paper. People are really catching on.

Sun, 01/27/2013 - 22:38 | 3190162 fonzannoon
fonzannoon's picture

yeah good find. i'm on mobile and can't link for some reason. the afticle is a throwaway. the comments are really interesting. i feel a lot more comfortable ranting on ZH now if people are ranting like that on the NYT. Not a lot of faith in the monetary system on there.

Sun, 01/27/2013 - 22:44 | 3190174 holdbuysell
holdbuysell's picture

Agreed. For anyone not in total denial, it really is becoming that obvious.

Sun, 01/27/2013 - 21:55 | 3190049 Seasmoke
Seasmoke's picture

Sounds like selling MBS and then going out and shorting against

Sun, 01/27/2013 - 22:00 | 3190069 Tijuana Donkey Show
Tijuana Donkey Show's picture

It's OK, they are short AAPL, so it's all good. 

Sun, 01/27/2013 - 22:00 | 3190074 AldoHux_IV
AldoHux_IV's picture

Foreign long-term securities... like Foxconn bonds or some other slave labor producing company overseas-- nice to see how US companies finance "economies of scales"-- the fraud is becoming that much clearer. Or I could be wrong and they use it for something else... what would I be doing with it if I was AAPL? hmmm....

Sun, 01/27/2013 - 22:00 | 3190075 buckethead
buckethead's picture

Churn and burn + pump and dump + Squid pro quo... another day at the office.

Sun, 01/27/2013 - 22:00 | 3190076 ss123
ss123's picture

Maybe AAPL's been buying themselves the last four years, over and over and over again.

Sun, 01/27/2013 - 22:01 | 3190077 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Liberals love apple and nafta, two things that destroyed America. Way to go blue team.

Sun, 01/27/2013 - 22:21 | 3190118 Freddie
Freddie's picture

They have this moral righteousness especially when using their beloved Apple technology which makes they morally & technologically superior to the rest.   Amazon is another lefty company that sell counterfit goods.  Conservatives like shitty Wal Mart which is now an O sell out.

Apple is really slimy like GE.  Apple are tax dodgers using slave labor while front running and pumping their stock.  Apple shit is also incredibly overpriced.  i bet a lot of their crap is bought with EBT cards and college loans.

Haysus Christo - this world and America today make Alice in Wonderland look very normal.

Mon, 01/28/2013 - 03:35 | 3190660 Parrotile
Parrotile's picture

It's FASHION, sunbeam!

Combined with a very hefty dose of Product Placement (or have you not noticed that every laptop on every new movie release somehow seems to have the glowing Apple icon??)

"Everyone" builds IBM / IBM PC Laptop clones which work very well, are reasonably priced (for the performance), and inexpensive to repair and / or upgrade "within limits" So there's no cachet owning and using a PC clone is there, even if it is from a very reputable manufacturer (Acer / HP etc.)

With Apple, however, to paraphrase the Jeep ad - "There's only ONE Apple", and there's the rub. The fashionistas MUST have Apple, and like any fad, the Manufacturers can (and do) milk this herd behaviour for every cent.

I see this mentality at work every day. MUST have the latest iPhone.

It's their money - let them waste it. They'll learn the hard way soon enough.

Sun, 01/27/2013 - 22:02 | 3190081 Sellmoney
Sellmoney's picture

every broker readig this got a lil wood... 


Sun, 01/27/2013 - 22:02 | 3190083 AldoHux_IV
AldoHux_IV's picture

Accounting/legalize is the language of fraud and shadiness only to be supported by our great laws and lawmakers.

Sun, 01/27/2013 - 22:05 | 3190085 max2205
max2205's picture

Churn and burn

Sun, 01/27/2013 - 22:07 | 3190089 ziggy59
ziggy59's picture

Apple shelters almost $1bn a week from US tax man
Technology giant Apple shuttled $11bn (£7bn) into offshore tax havens in the fourth quarter of 2012, an analysis of its corporate filings has revealed.

Sun, 01/27/2013 - 22:10 | 3190095 Tyler Durden
Tyler Durden's picture

Or the analysis above. But that story is very well known by now. The question is "how" as this post explains, and what it means aside from the obvious.

Sun, 01/27/2013 - 22:53 | 3190195 SunBlaster
SunBlaster's picture

I was so waiting for a graph that showed amount of own shares sold/bought vs stock price. 

Sun, 01/27/2013 - 22:09 | 3190093 reader2010
reader2010's picture

Karma is a bitch.

Sun, 01/27/2013 - 22:15 | 3190109 dolph9
dolph9's picture

Just keep updating your iPhones and iPads, sheeple, and don't ask questions.

Sun, 01/27/2013 - 22:21 | 3190125 ss123
ss123's picture

I ate mine. :-(

Sun, 01/27/2013 - 22:21 | 3190126 joego1
joego1's picture

Are you trying to tell me that my bank of apple is a scam?

Sun, 01/27/2013 - 22:37 | 3190164 Cabreado
Cabreado's picture

Having experience in the industry, perhaps Mattel and Hasbro could help(?)

Sun, 01/27/2013 - 22:45 | 3190177 PhoThus
PhoThus's picture

Still waiting for Apple to pull their head out and make an iPhone with a nice large screen.

Sun, 01/27/2013 - 22:48 | 3190182 Tom Green Swedish
Tom Green Swedish's picture

Apple has a ton of cash.  That cash will one day be put to use.  It's a screaming buy at this price.  Remember what happened to Netflix.  Apple is 1,000 times better.


Secondarily, you keep bitching like a little girl about the FED and how much money they spent on QE.  I'm sorry buddy but the banks have excess reserves of 1.4 trillion dollars, and how much did the FED print?  The 53 to 1 leverage?  Thats bullshit the money is just sitting there doing nothing.  Yes the FED's balance sheet did increase, but all the banks paid back TARP, and we are only owed 130 billion dollars.  Yes you read that right.  Excess money have been printed, but it is being held by banks.  Do some research.  If it was let out into the economy we would have massive inflation, which would be rational for your PM hoarding nonsense.  So there you have it excess reserves beyond the 10 percent requirement are 1.4 TRILLION DOLLARS. Yes, that is money to burn.


How about we start with the EURO bashing again.  Italy only has 1.5 billion Euro in excess deposits, Germany around 313 billion Euro.  This is nothing and if there is a "run" on the banks this is about 30 DOLLARS PER PERSON in ITALY.  The ECB, and UK require 1 percent and 0 percent as a reserve requirement.  Get your facts straight.  The FED may have printed money but it is just a backstop. They are like Apple times 10. The banks hold all the money, not the Apple has more money than the Federal Government bs you talk abuot.[1][id]=EXCRESNS

Sun, 01/27/2013 - 23:01 | 3190209 RSBriggs
RSBriggs's picture

And your point is what, exactly??? 

Mon, 01/28/2013 - 02:26 | 3190532 TWSceptic
TWSceptic's picture

Fools as yourself will be punished.

Mon, 01/28/2013 - 03:36 | 3190655 socalbeach
socalbeach's picture

The existence of X dollars in excess reserves doesn't mean the money is necessarily sitting idle, it means it's not being loaned out to the maximum amt permissible. Fed money printing has suppressed interest rates and enabled high levels of government spending, both of which cause price inflation. For example, if one is the recipient of government largesse and that person spends the money given to him, excess reserves stay the same as long as the moneys stays in US banks, but the money isn't idle.  Also, monetary velocity, which is tied to GDP, doesn't capture money spent buying existing homes, bidding up stock prices, or spent on imports.

Look at the graphs of M1, M2, and MZM, and you can see popular measures of money supply are increasing rapidly, so we have monetary inflation as well.

Sun, 01/27/2013 - 22:55 | 3190194 jonjon831983
jonjon831983's picture

Dunno... maybe they`re trying to help by doing a wealth distribution from the poor sods who sell a kidney or liver to buy an iDead and churning it out to the poor old financial industry apparatus?

Sun, 01/27/2013 - 22:56 | 3190199 jonjon831983
jonjon831983's picture

Did anybody try asking Siri?

Sun, 01/27/2013 - 23:23 | 3190264 Freedumb
Freedumb's picture

You can try, but you're not going to like what she has to say very much.....

"British tween Charlie Le Quesne and his mom were shopping at a store in England when he picked up an iPhone 4S on display and innocently asked Siri, "How many people are there in the world?" The 12-year-old, expecting the phone's automated assistant to give him a number, got a real shock when instead Siri answered, "Shut the fuck up, you ugly twat." Whoa, girl, watch your mouth!!! Charlie's mother, Kim, couldn't believe what she'd heard, so they asked the same question, thinking it must have been an error. But crabby Siri fired back with the very same expletive-laden rant." (Jezebel)

Sun, 01/27/2013 - 22:59 | 3190202 Ricky Bobby
Ricky Bobby's picture

Bravo! Fucking Masterpiece.

Sun, 01/27/2013 - 23:02 | 3190213 Monedas
Monedas's picture

What is your fucking problem .... it is AAPL's sacred duty to pay the Bernanke and the Obama .... as little tax as possible .... that's a resume enhancer .... as far as getting good PR for trading a lot .... well, what's your problem with that .... I don't own any AAPL .... but I applaud anyone's effort to survive in this sick socialist world  ?  

Sun, 01/27/2013 - 23:10 | 3190229 The Shootist
The Shootist's picture

Yeah, fuck taxes. The colonists had a revolution over a 1% tea tax. We're just debt slaves.

Sun, 01/27/2013 - 23:03 | 3190215 holdbuysell
holdbuysell's picture

Fantastic analysis of the Q's and K's by ZH once again. Hidden in plain sight.

Show's over. The tech engine has gone to idle. Perhaps it rises again with the connected TV as Apple moves to the living room. Time will tell.

Or, watch for the Won to rise relative to the USD to put Samsung in check.

Sun, 01/27/2013 - 23:09 | 3190227 Monedas
Monedas's picture

What were Foxconn employees doing before AAPL .... silk screening cormorant shit for edible fish scales ?  The Socialist mind set implies a limited imagination !

Mon, 01/28/2013 - 02:06 | 3190567 adr
adr's picture

Making motherboards, TVs, LCDs, alarm clocks, and millions of otherfar more valuable products than an iPhone. Oh, by the way they still do. The iPhone is a big part of the business, but just one product of many.

Sun, 01/27/2013 - 23:24 | 3190248 Monedas
Monedas's picture

Februrary  means Winter Festival in Pyongyang .... get your tickets now .... to get good standing room only spaces .... the military parades are superb over ice .... the synchronized click of the boots .... has a smart report .... you can't get that in the lazey, hazey parades of summer ! In Spain .... it's "sol or sombra" for the bull fights .... in Pyongyang .... you want your back towards Siberia !

Sun, 01/27/2013 - 23:23 | 3190263 Ricky Bobby
Ricky Bobby's picture


Sun, 01/27/2013 - 23:26 | 3190273 Aunty Christ
Aunty Christ's picture

A cursory look of their 10Q and 10K's reveals their investment portfolio generates a return that is well under 1%. Traditionally, cash rich tech companies reinvest in short term debt instruments. Lately they have kicked up the allocation to mortgage backed securities and maybe a sprinkling of high yield, but those new allocations won't move the needle. It has always amazed me that tech companies treat their largest asset on the balance sheet as an after thought instead of trying to coax a return that beats their imputed cost of capital...

Sun, 01/27/2013 - 23:36 | 3190311 bobson
bobson's picture

Something brewing at BAC?

Mon, 01/28/2013 - 00:13 | 3190400 They Tried to S...
They Tried to Steal My Gold's picture

So how much money has APPLE made SHORTING it's own stock ? 


If Apple has the intention of doing a massive buyback anyway - Would it not make sense to short their own stock - taking out every damn stop known to man ,,,,,,,making money on the down side - create a technicallly poor stock to buy

and then create the :



                                   AT THE SAME TIME DRIVE THE STOCK ABOVE $750 A SHARE!!!!


Mon, 01/28/2013 - 00:23 | 3190421 Dr Benway
Dr Benway's picture

For sure one day AAPL will engineer the greatest short squeeze of all time with buybacks. The beauty is this though: just the threat of this short-squeeze buyback is enough to deter shorts. The cash hoard should be seen as a way to terrorize other market participants into leaving AAPL well alone, thus removing price discovery. Soon all companies will engage in this financial terrorism, keeping billions on hand that they can use on selective ocassions to ramp the share, in order to squeeze the shorts or reward executives.

Mon, 01/28/2013 - 00:51 | 3190470 Oh regional Indian
Oh regional Indian's picture

you're probably correct and the world of finance is truely and totally f'ed!

Just the daily figure, as big and sometimes bigger than POMO. Forget all the insider power such an arsnel of paper implies.

The mind truely boggles and APPL is really the company that will bring the house down when it's good and ready and the thermite is in all the right places.

A day of reckoning approaches.





Mon, 01/28/2013 - 00:31 | 3190436 mjk0259
mjk0259's picture

Most non index mutual funds have more turnover than that.

Mon, 01/28/2013 - 00:52 | 3190483 q99x2
q99x2's picture

Why not own a public company and own a hedge fund to move the companies stock price up and down. I think Braeburn Capital should short AAPL into flames.

Mon, 01/28/2013 - 01:01 | 3190502 godzila
godzila's picture

I understand that the reporting requirements for what is being done with that money is pretty low but surely the AAPL balance should reflect whatever realized and unrealized P&L has been extracted from that pile of cash ?

Mon, 01/28/2013 - 01:25 | 3190531 Cardinal Fang
Cardinal Fang's picture

The Telecom sector is very complicated, one would need to be able see the future to know what kind of rainy day Apple is forecasting, and for whom. hmmm, how much would you need to buy VZ or ATT? Or sell out to them? or?...

Mon, 01/28/2013 - 01:30 | 3190533 newengland
newengland's picture

The irony of it all. Steve Jobs the hippy geek jew designed a phone that everyone wants, and employed slaves in the East to make it. It's tradition. The world's biggest slave traders were jews.

Then the Israelis put major money into the company...and the price has fallen ever since.

What is it with these people? Do they hate each other? Madoff stole mostly from jews. Corzine's victims were mostly jews.

Oy vey! Their ghetto is killing them.

Mon, 01/28/2013 - 01:48 | 3190551 Milton Waddams
Milton Waddams's picture

jew bashing is the wart on zerohedge's ass.  

i hate to break it to you but people --- even non-jews --- hide behind the 'ANTI SEMITISM' balony because... it works.

don't hate the player, hate the game.

and you are here.

Mon, 01/28/2013 - 03:33 | 3190658 newengland
newengland's picture

Jew Jobs was a credit to his tribe. 'Jew bashing' on ZH is your perception.

Don't hate anyone. Write facts, figures and honest opinion.

Mon, 01/28/2013 - 02:32 | 3190602 TWSceptic
TWSceptic's picture

No, he does not practice Judaism. He is not Jewish by blood either as his father is a Syrian Muslim and his mother is of Swiss and German descent. He practices Zen Buddhism.


Mon, 01/28/2013 - 01:35 | 3190537 Milton Waddams
Milton Waddams's picture

Fucking taxes, man.  If Apple were able to pay less they could hire more Chinese 'slave' laborers.  Think about the empire people, the empire.

Mon, 01/28/2013 - 01:36 | 3190539 Curt W
Curt W's picture

Tyler's flash crash story about apple on friday is referenced on a cnn money story

Mon, 01/28/2013 - 01:41 | 3190546 newengland
newengland's picture

BTFD - unless it is APPLcrap.

Mon, 01/28/2013 - 01:37 | 3190541 Walt D.
Walt D.'s picture

"Most also know that AAPL aggressively uses all legal tax loopholes to pay as little State and Federal tax as possible, despite being one of the world's most profitable companies. "

... despite being one of the world's most profitable companies. ? 

What's that supposed to mean? Because they are profitable they should move to New York. Why not move to Paris? 

Mon, 01/28/2013 - 02:16 | 3190581 adr
adr's picture

It was also just a few years ago that Apple just started opening thier own stores all over the place. The stores are used for channel stuffing to fake sales. I'm sure a little digging would find entities linked to Braeburn that either hold the property Apple stores sit on, or purchase inventory directly.

For certain the stores are incorporated seperately from Apple allowing them to book all shipped product as sold. The shipments to each Apple store are insane, and the reported sales are impossible. Perhaps if you could only purchase an Apple product from an Apple store, but considering you can buy an iPhone at just about any retailer, there is no fricken way.

Apple is every scam in the book wrapped into one company. Who knows, Braeburn may be the deal Steve made to get his job back, and probably his new liver. A funnel for Fed money, maybe even CIA stash. Whatever it is, it isn't just some shiny phones.

Mon, 01/28/2013 - 02:34 | 3190611 El Hosel
El Hosel's picture

         ... End the Apple

Mon, 01/28/2013 - 02:39 | 3190617 awakening
awakening's picture

Gonna need a lot of popcorn when that bubble, constructed by Apple flavoured bubblegum, pops.

Mon, 01/28/2013 - 03:42 | 3190667 resurger
resurger's picture

The FED will buy them, Afriend in need is a friend indeed right?

Mon, 01/28/2013 - 04:04 | 3190670 newengland
newengland's picture

CrApple is a scam now, although it was once a very fine innovative company. Pity about its's slave labour in the East, though. Odd that 'liberals' do nothing to end slave labour in the East which gives them their cheap toys, clothes et cetera.

Gosh. Anyone might think that the Democrats and Republicans are the new feudalists, slave masters with their globalist agenda.

Convenient that HollyWould comes out with another revisionist version of history  'Lincoln' as a guise for CONgress, and omits Lincoln's Christian will. Convenient that Obomba says he admires Lincoln. So many coincidences. So little truth.


Mon, 01/28/2013 - 03:59 | 3190673 Hobie
Hobie's picture

Braeburn apples always were a little tart.

Mon, 01/28/2013 - 09:01 | 3190894 Baldrick
Baldrick's picture

Good for cooking though, not great like Ida Reds

Mon, 01/28/2013 - 05:29 | 3190717 falak pema
falak pema's picture

the greatest example of entrepreneurial morph into a "special investment vehicle", creation of the financialised shadow banking world. Its a snake that feeds itself until it eats its own tail; aka... Because while the Fed can print its own liquidity, AAPL, well, can't... 

GM, GE and all the corporates before Apple used this route and it destroys the inner core of entrepreneurial culture.

Going from 100 Billion to 110 Billion is inevitable...going from zero to one million was the true adventure.

Now its just a fiat factory of paper power, lets see if the flame of Jobs lives on. 

Mon, 01/28/2013 - 11:37 | 3191340 hallywood
hallywood's picture

Let's revisit when they contrast their results in 2013. Is Braeburn to AAPL what the FEd is to the S&P? Hmmm

Mon, 01/28/2013 - 14:09 | 3191952 Youri Carma
Youri Carma's picture

Very interesting read!

Thu, 02/07/2013 - 10:13 | 3222740 devo
devo's picture

In shudder to think of the inflation rate after (an inevitable) tax holiday.

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