David Rolfe presented his in-depth investment thesis on Apple (Nasdaq: AAPL) at Wide-Moat Investing Summit 2013.
The Bottom Line: Stock offers over 20% EV/EBITDA yield. Plug that into a bond calculator (5-year duration) and it’s worth 2x today. Ft. Knox-type balance sheet. Buyback gun reloaded in 2-3 years. The ecosystem is the “franchise” (e.g. 600 million active credit cards in iTunes) – product upgrades are peripheral to the ecosystem. After the “Year of Lost Growth” in fiscal 2013, stock is abandoned by hedge funds, momentum traders and has only a minimum weighting with traditional long-only growth investors. This creates an opportunity for patient, long-term investors. 2014 should see the return of the “growth company.” New product drought ends in September (new product line-up: iPhones, iPads, iOS 7, Mavericks OS, Mac Pro, iWatch, Apple TV). And lower cost iPhone can still increase firm-wide gross margins.
About the instructor:
David Rolfe is Chief Investment Officer of Wedgewood Partners, a St. Louis based investment firm founded in 1988. Over the years, Wedgewood’s focus on undervalued large-cap companies combined with its “Invest as Business Owners” strategy have resulted in significant outperformance relative to benchmark indices. David joined the firm in 1992 in his current role and has been instrumental in achieving Wedgewood’s investment track record since then. David holds a Bachelors degree in Finance from the University of Missouri-St. Louis. He is a member of the CFA Society of St. Louis, where he has served as an officer and director.
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