Is it a good decision to sell shares right after the company published a very good results?
Well, it depends…
On Tuesday, Apple surprised investors with much better results than predicted by analysts.
Next morning I decided to reduce my stake in the Apple company.
The transactions were made using my ISA account in Saxo. I used ISA account which means that I will not pay taxes on the gains made on the Apple shares. I wrote about this type of account in this post.
But you should not think that I gave up on the company.
Apple is still my 3rd biggest position.
Before the transaction Apple was my 3rd biggest position. After the transaction, it remained on the 3rd place in terms of allocation of my money but this allocation was reduced.
Polish game developers – CD Projekt and 11 Bit Studios
There were a few reasons for the transaction.
I decided to increase my exposition to the companies from one of the most undervalued market. To be more precise, I bought shares of two Polish game developers. I increased my stake in CD Projekt and 11 Bit Studios.
Here you can find the more detailed reasons for increasing my exposure to Polish stock market.
Why I still hold the shares of Apple
You could read or hear from many sources that no one is buying iPhones and Apple products anymore. They are considered to be too expensive and you can have a really decent phone with Android operating system for half the price. It is possible, I am not judging the reasons for why people buy devices of different companies.
What I want to show you is something what everybody loves. Statistics. At least I love statistics 😉
Have a look at these statistics from the StatCounter website.
About the data sample:
Stats are based on aggregate data collected by StatCounter on a sample exceeding 10 billion page views per month collected from across the StatCounter network of more than 2 million websites. Stats are updated and made available every day, however are subject to quality assurance testing and revision for 45 days from publication.
You can see that Apple is not dead.
First, usage of operating systems:
- both iOS and OS X usage is increasing (iOS and OS X are Apple operating systems for their devices);
- it is increasing not only Worldwide but also in the quickest growing market – Asia.
We can observe similar trends for mobile vendor market share. I do not see anything concerning for Apple on the basis of these data.
Reasons for still holding shares of Apple
- $210.6 billion in cash on hand
It will be returned to shareholders:
Or invested to increase earnings in the future
- video content production for the Apple TV+ streaming service,
- acquisition of companies.
Diversification of revenue streams
What this quarter shown is that the company can grow even if the number of iPhones sold is dropping.
Diversification of the product line is finally paying off. The share of revenues from iPhone segment is now below 50%.
Apple is slowly becoming less dependent on iPhone sales, and Services are becoming a larger part of their overall revenue. Diversification of sources of revenues is something what Wall Street loves.
The quickest growing segments are:
- the wearables, home, and accessories which was growing 48% Y/Y,
- services with growth of 13% Y/Y.
Apple TV+ as a video content aggregator?
Definitely there is a need for some kind of aggregator of video content. People have multiple video streaming subscriptions and it is getting more and more difficult for them to manage it. Knowing which movie or TV series is available in exactly which service can be problematic.
Apple is best placed to do it, like they did it with Apple News service.
As you can see I diversify the allocation of my money. With selling some shares of Apple I reduced exposition to the US market. The same time I increased exposition to the Polish stock market – I remind you that Polish economy is expected to be the 4th fastest growing economy.
However, I am not an advocate for wide diversification.
I will just remind you the words of Warren Buffett:
Around 50% of my money were allocated in just 3 companies. My decision paid off. This year:
- Apple shares gained 36.88%
- Facebook shares gained 51.37%
- Alphabet shares increased 20.18%.
All three companies positively surprised the markets by their 2nd quarter earnings which did not happen to Amazon, Netflix and many other companies.
Please note I am not a regulated financial advisor and so any help will be non-advisory. If you are unsure of the suitability of any investment you should seek professional financial advice.