Apple Inc. (NASDAQ:AAPL)’s brief rally yesterday wasn't due to anything CEO Tim Cook said. It was all about something Legg Mason portfolio manager Bill Miller said Tuesday night. Unfortunately the rumor wasn't quite good enough to give Apple shares any staying power.
Apple Inc. (NASDAQ:AAPL) shares are subject to the rumor mill these days, and we haven’t really had a good one in a while, which may be why the stock hasn’t recovered from its less-than-stellar earnings report in January. But yesterday, there was some talk that led to a small rally for Apple, although it was quickly erased. The stock’s value has fallen so far from its high in September that all of the gains it made within the past year have dissipated. Market Studies CEO, Tom DeMark, predicted that Apple Inc. (NASDAQ:AAPL) shares would rally on Monday, but they failed to do so.
Shares of Apple Inc. (NASDAQ:AAPL) are now worth less than $460 per share, but yesterday in morning the stock was trading closer to $470 per share for a few minutes. CNBC’s “Fast Money Halftime Report” noticed Apple Inc. (NASDAQ:AAPL)’s rally and speculated about what was causing it. Barron’s recounts some of the conversation.
First, there was talk of a rumor that Apple Inc. (NASDAQ:AAPL)’s CEO, Tim Cook, had said something at a conference sponsored by Goldman Sachs Group, Inc. (NYSE:GS). Unfortunately that conference isn’t until next week, so that wasn’t it.
Then they realized the rumor stemmed from a proposal made by Legg Mason portfolio manager, Bill Miller. In an interview published in the Financial Times, Miller said Apple Inc. (NASDAQ:AAPL) could boost the price of its shares if it gave a larger dividend. He said the company’s stock could go up by as much as 50 percent, if Apple decided to do that. Miller suggested that since Apple Inc. (NASDAQ:AAPL) has such a nice cash stockpile right now, it could afford to push future cash flow into a nice, hefty dividend for shareholders.
Miller also said the shares of Apple Inc. (NASDAQ:AAPL) are losing value because investors are beginning to believe Apple products are no longer “the” thing to have. He said he believes Apple has very loyal customers, so he thinks investors who are selling off their shares of Apple Inc. (NASDAQ:AAPL) are making a big mistake.
So just how do these Apple rumors get started? Each one starts in a different way, and this one merely started with a “what if?” statement. This just goes to show how much power these ‘experts’ in the financial world have. They can speculate about something, and the stock will go higher, even if we don’t have reason to think that what they suggest will ever actually happen.