For a new client this week, a small weighting of Apple (AAPL) was purchased with the intent to add more if the stock tests the previous early December ’14 high of $119.75.<\/p>\n
However, the stock has clearly been a monster for any buy-and-hold investor:<\/p>\n
YTD return: +14.5% as of 3\/25\/15<\/p>\n
1-year ret: +63.59% as of 3\/25\/15<\/p>\n
* Source: ycharts.com<\/p>\n
Although AAPL was down 2.6% today and has fallen 6.44% over the last month, it is the most universally loved name within the SP 500 right now, but that isn’t why its scares me.<\/p>\n
Here are a few stats I’m watching:<\/p>\n
AAPL’s market cap weight within SP 500:<\/strong><\/em> 3.96% (twice the market cap of Exxon at 1.91%)<\/p>\n AAPL’s earnings weight within SP 500:<\/strong><\/em> 6.4% (three times the next largest earnings weighting, MSFT at 2.1%)<\/p>\n AAPL’s market cap weight within QQQ:<\/strong><\/em> 14.43%<\/p>\n One ETF I’ve been considering buying for client accounts, although the homework is still being done on it, is the QQQE or the Direxion equal-weighted Nasdaq 100 ETF, simply to begin to diminish the impact of AAPL on client portfolios.<\/p>\n Since Trinity is primarily a fundamental investor first, here are some other key metrics that caught my eye of late:<\/p>\n Capital retn’d as % of Free-cash-flow (FCF), last 4 quarters:<\/strong><\/em><\/p>\n 12\/14 quarter: 94%<\/p>\n 9\/14 quarter: 112%<\/p>\n 6\/14 quarter: 82%<\/p>\n 3\/14 quarter: 119%<\/p>\n Basically AAPL is currently paying out all of its free-cash-flow to shareholders, which is probably a prudent move given the attention being paid to AAPL by activist investors like Carl Icahn, etc.<\/p>\n Thus the real question is, “What does Apple do with the $180 billion or $30 per share just sitting on the balance sheet ?” I think that becomes the source of tension that AAPL will have to contend with activist investors.<\/p>\n