Doug Kass: Apple Looks Like Microsoft in 2004

Monday, 19 Mar 2012 | 6:22 PM ET

Apple bulls may not like this. Widely followed investor Doug Kass sees similarities between Apple and Microsoft in 2004.

Here’s the thought process.

“I viewed the Apple capital allocation as Microsoft redux – if you go back to July 2004 you can use Microsoft as a template for Apple,” says the Seabreeze president and CNBC Contributor.

BofA Rollover & Dividend Investing
Dissecting the day's major business news, with the Fast Money traders, including the top non-dividend paying companies with the biggest amount of cash on their books, with Colin Gillis, BGC Financial.

“It’s another a large cap tech company – admittedly not with the stellar growth prospects as Apple – but it too was flush with cash. And they did a $75 billion capital move – which is far greater than Apple’s – doubled the cash dividend, announced a $13 billion stock buy back."

You'd think that would drive shares higher over the next few weeks, right? Not so.

In 2004, Microsoft shot higher only to drop steadily for the next 2 weeks. “It gapped higher to $29.5 but then, two weeks later, it was back down to $27,” Kass explains. That's about an 8% decline.

If Kass is right, Apple could trade down to around $550 in a fortnight.

And Kass is putting his money, where his mouth is. “I shorted the stock around $605 and covered some at $583 – but I’m still short,” he says.

* Kass is also president of Seabreeze Partners and a contributor to the Street.com, Jim Cramer’s Real Money Pro web site.


NEW SLIDESHOWTop Apple-Related Stocks for 2012Don't miss all these second derivative trades!


Read More:
> Doug Kass: Next S&P Move Likely 4-5% Lower

Got something to to say? Send us an e-mail at fastmoney-web@cnbc.com and your comment might be posted on the Rapid Recap. If you'd prefer to make a comment, but not have it published on our Web site, send those e-mails to fastmoney@cnbc.com.

Trader disclosure: On Mar 19, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Karen Finerman is long AAPL; Karen Finerman is long BAC; Karen Finerman is long JPM; Karen Finerman is long WMT; Karen Finerman is long TGT; Karen Finerman is long SPY; Karen Finerman is long IWM; Karen Finerman is long MDX; Karen Finerman is long FRO; Michael Murphy is long ANF; Michael Murphy is long JOYG; Michael Murphy is long SBUX; Michael Murphy is long PHM; Tim Seymour is long INTC, Tim Seymour is long CSCO, Tim Seymour is long YHOO; Tim Seymour is long CSCO; Tim Seymour is long YHOO; Guy Adami is long C; Guy Adami is long GS; Guy Adami is long INTC; Guy Adami is long AGU; Guy Adami is long MSFT; Guy Adami is long NUE; Guy Adami is long BTU

For Doug Kass
Doug Kass is short AAPL

For Colin Gillis
No Disclosures

CNBC.com with wires.

  Price   Change %Change


Contact Fast Money

  • Showtimes

    Halftime Report - Weekdays 12p ET
    Fast Money - Weekdays 5p ET
  • Melissa Lee is the host of CNBC's “Fast Money” and “Options Action.”

  • Scott Wapner is host of the "Fast Money Halftime Report," which airs weekdays from 12 p.m. to 1 p.m. ET.

  • Guy Adami is a contributor on CNBC's "Fast Money." He also is managing director of stockMONSTER.com.

  • Najarian, the "Pit Boss," is cofounder of optionMONSTER.com, a news site for options traders.

  • Finerman is president of Metropolitan Capital Advisors, Inc., a company she co-founded.

  • Founder of EmergingMoney.com

  • Chief Market Strategist for Virtus Investment Partners & CNBC Contributor

Halftime Report