Analysts are not
from Apple's (NASDAQ:
) fiscal 2013 second quarter results. Jim Tassoni, the Managing
Director and Chief Investment Officer of Durand Capital Partners,
does not care. Whatever happens, he plans to stand by Apple.
"Based on our metrics and what we look at, we don't believe
that Apple is any different from a company now than it was four,
five or six months ago," Tassoni told Benzinga.
"But, four, five or six months ago -- when it was at $700 --
we weren't adding to the stock just because of that piece. The
valuation had it slip down in our rankings. We didn't feel it was
a prudent time to be adding to that position.
"At the same time, now that it's down at $400, it is becoming
much more attractive on a valuation piece, at the very
Tassoni said that his cost basis in Apple is $280.
"So, from a cost basis standpoint, we're still up," he said.
"Have we been losing money? Yes, we owned it all the way up to
$700. We didn't sell it at $700.
"It's painful but this strategy is not short-term -- it's a
long-term investment thesis. We're looking to outperform the
market over three, five, seven, 10-year periods. We're not gonna
outperform every quarter."
Tassoni said that his strategy allows for stocks to do well in
the long run.
"At this point, as much as Apple has pulled back, and as
painful as it has been as a piece of the portfolio, that's why we
have 25 to 35 names in the portfolio. Apple, right now,
represents a 2.5 percent weighting in the portfolio."
A Contrarian Indicator
If Wall Street wants to continue selling Apple, that's fine --
Tassoni will sit back and enjoy the windfall.
"It's no disrespect to Wall Street analysts, [but] we almost
believe that analyst estimates and recommendations are a
contrarian indicator," said Tassoni. "We like when there's
Tassoni believes that Apple could announce an app that allows
users to travel through time and analysts would still come out
and say, "Yeah, but it doesn't go fast enough."
"Apple…it's such a switch in psychology, and psychology is a
dangerous short-term game in the market," Tassoni warned. "For
several years, Apple could say anything and it was the most
positive news you could ever imagine. It was all spun positively.
In the last six months, that has totally flipped. Now no matter
what they do, no matter what they say, it's a negative
A Contrarian Indicator
"We still have a fundamental belief that Apple is a quality,
long-term company," Tassoni continued. "We're not necessarily
saying that this is the very bottom. But we're confident that in
three, five, 10 years from now, Apple is going to be
significantly higher than where it is right now, and we want to
be able to participate in that significant outperformance."
Tassoni suggested that Apple is "disconnecting" from the
"If you look at day-by-day trading, when the market is going
up, Apple seems to underperform," he explained. "When the market
is going down, Apple seems to outperform. It's becoming almost a
safe haven for cash when the market is going down. It's
disconnecting -- it's no longer that pure beta play, where if the
market is up, Apple is going to be up more, and vice versa.
"We kind of like that. It fits with our philosophy. We look at
it and say, 'If we're gonna get a pullback here, if this trend
continues, Apple should be an outperformer in a down or sideways
market.' We like that as well."
Bigger Than The Apple Brand
Finally, Tassoni said that if analysts took the Apple name off
the stock and looked only at the fundamentals, "99 out of 100
analysts would rate this stock a Buy right now."
"But because it's got the name Apple on there, there's that
psychological issue," said Tassoni. "We feel that psychology is
where we make money."
Louis Bedigian is the Senior Tech Analyst and Features Writer
of Benzinga. You can reach him at 248-636-1322 or
louis(at)benzingapro(dot)com. Follow him
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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