It is rumored that AAPL placed their 10-year paper at 10yrTbond+75bps, which means about a 2.4% rate, if I'm reading the screen correctly. Given that the yield on AAPL's equity is about2.9%, that's a nice positive-cash-flow way to conduct a buyback and still keep your overseas cash hoard protected from taxation. Not that it matters (or has any magical power), but for the equity to get to a2.4% yield, with a divvie payout of $12.20, it would need to hit about $508.

One wonders how many other firms are doing, or considering doing, this type of buyback financing.

Rocky Humbert writes: 

For the period January 2008 to June 2012, Apple stock rose at a compounded IRR of 40% for a price change of 331%. For the same period, the Nikkei declined at -1% …. for a price change of -12%.

For the period June 2012 to present, Apple stock declined at a compounded IRR of -27% for a price change of -25%. For the same period, the Nikkei rose at a compounded IRR of 34.5% for a price change of 26%.

Who in "their right mind" would argue that the Japanese aversion to iPADS does not fully account for this statistically significant negative correlation?

Furthermore, with respect to your comment about my trade in Apple stock (which I ka-chinged yesterday as it finally valued the arbitrage accretive value of the buyback with no regard for growth prospects about which I have no opinion): I would note that Warren Buffet argued cogently that Apple should use its cash pile to buy back stock when it's below intrinsic value and create wealth when Mr. Market is irrational. As Apple followers know, there was much speculation about Apple's cash deployment plans — and that the behemoth actually traded down on the morning following this announcement shows that it took some time for Mr. Market (as distinct from the HFT bots) to correctly assess the significance. If Hewlett-Packard had followed the same path, instead of literally throwing out billions on (what turned out to be) a fraud acquisition in England, I might still own that stock and it would likely be trading in the 40's today. Instead I sold it "horribly" at 27 on the news of the acquisition and incurred a loss and the ridicule of many on this site.





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