Jeff Gundlach, bond guru and chief of Doubleline Capital, predicted a few months ago that Apple Inc. (NASDAQ:AAPL) stock would hit $425. Well, the stock is now trading below $425 ($421.77 at 2:49 PM EST). Jeff Gundlach is a bond specialist and his bearish call on Apple equity received quite a bit of intention. In fact, he seems to have been shorting Apple Inc. (NASDAQ:AAPL) since April last year when the stock was trading around $600. Furthermore, Jeff Gundlach thinks Apple is overpriced, broken and over-owned. He will consider it cheap only when the stock comes down to $300 per share.
What has baffled investors about Apple Inc. (NASDAQ:AAPL) is that every celebrity investor and analyst has a different opinion of the stock. And the technology sector is so unpredictable that you can’t imagine where the next wave of revolution will come from and which company will go extinct.
Warren Buffett’s Annual Letter: Mistakes, Buybacks and Apple
Warren Buffett published his annual letter to shareholders over the weekend. The annual update, which has become one of the largest events in the calendar for value investors, provided Buffett's views on one of the most turbulent and extraordinary years for the financial markets in recent memory. Q4 2020 hedge fund letters, conferences and more Read More
While Jeff Gundlach is shorting Apple, “Apple guru” Pipper Jaffray’s senior analyst Gene Munster, is still positive about the company. It’s Munster who first predicted Apple Inc. (NASDAQ:AAPL) would release an iWatch. After Apple Inc. (NASDAQ:AAPL) announced its disappointing first quarter results, Gene Munster defended Apple despite slightly disappointing iPhone sales. To an extent, Apple’s first quarter revenues were impacted by iMac shortages that resulted in a $1.3 billion shortfall.
Despite iPhone shortages and slow Mac sales, Apple’s Q113 earnings of $13.81 were well above the consensus estimate of $13.48, and far better than the company’s own guidance of $11.75. The company’s second quarter revenue guidance of $41-$43 billion is better than his own estimate of $41 billion. Munster said demand in China and other emerging markets is growing rapidly. Despite fierce competition from Samsung Electronics Co., Ltd. (LON:BC94) (KRX:005930), the iPhone maker’s gross margin was 38.6 percent in the first quarter, and the company expected a 37.5-38.5 percent margin in the second quarter.
In the middle of all the back and forth debate, Berkshire Hathaway Inc. (NYSE:BRK.A) (NYSE:BRK.B) chairman Warren Buffett, advised Apple to buy back its own shares at reduced prices, and keep working on creating value. Warren Buffett said it’s the right time for Apple Inc. (NASDAQ:AAPL) to repurchase its own shares. The Oracle of Omaha said if he were Tim Cook, he would buy dollar bills at 80 cents.
Buffett said instead of worrying about the declining share prices, Apple Inc. (NASDAQ:AAPL) should buy back shares and keep creating value, the share prices will automatically take care of themselves. He advised Cook to ignore David Einhorn’s advice and instead repurchase the shares at a discount.