The iPhone maker looks to outperform the market over the next few years, Leon Cooperman of Omega Advisors says.
let’s start with apple. it is your top pick. it has been a winner. it is much loved from all of the hedges or at least most of them. are you as supportive here of the stock as you have been all along the way? it is not our largest position by far. we have been in it for quite a while and i think barry stewart, my partner right on, i have to step back and explain what we do. we’re a value-based investor, so essentially a value-based investor tries to do is get more for less, and so to give you a statistical rundown if i will on the s&p, you buy the s&p, you’re buying an index growing about 6% a year. a dividend yield is about 2% on average, and a little over two times book value. the debt is about 35% of capital and earnings around 15 or 16% return on shareholders equity, and for the statistic, for a company with those statistics, you’re paying on average around 13, 13.5 times earnings. what we try to do is find more for less. a company growing more rapidly at a lower multiple, yielding more in the market, having more asset value than the market, and that’s kind of our game. you look at apple, and based on our earnings estimate it is less than 13 times next year’s earning, yielding under 2% and we think grows 15% so growing substantially more than the market and discount to the market multiple and slightly lower than market yield. so that would be an example and maybe 2.5, close to 3% upward flow at the present time.