Amidst the gloom in Apple, our holdings get an Allergan break

After what appeared to be a selling climax last week, both Allergan common and convertible preferred shares soar. But beleaguered Apple shares refuse to follow.

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Apple CEO Tim Cook. Why is this man not smiling. (Image via YouTube video of Apple Event)

WASHINGTON, September 25, 2017 – We confess, we don’t really have a lot to say this fine Monday morning, as a surprisingly sultry but sunny autumn begins to unfold in the Nation’s Capital. Stocks, in general, are looking pretty sickly this morning for a variety of foreign and domestic reasons we’ve dealt with in our companion column.

Oddly enough, after the depressing battering Mr. Market dealt to our portfolios last week, we’re looking pretty good on Monday, at least as we approach the 2 p.m. hour ET.

Trading Diary

Short and sweet today, more or less.


Our modest position in Apple (symbol: AAPL) continues to get keelhauled as we move along through Monday afternoon. AAPL shares are currently hugging the $150 per share line, after nearly sinking below the $149 mark early in the session. That puts Apple down over 10 points from its pre-iPhone 8 announcement event.


Read Also: Stocks down Monday as Wall Street gives Washington the knee


For a stock that typically takes a shellacking after weighing in with its annual ritual September product announcements, this is a pretty swift decline and, we think, approaches what we’d regard as “overdone” territory.

It’s entirely possible that much of the current decline is simply due to profit taking. After all, the stock has been on a steady if bumpy ride upward since earlier this year, so why shouldn’t some institutions and other investors take a few bucks off the table now?

On the other hand, we suspect some short-sellers are at it, too. Why? Because lately, we’re getting more daily, negative, unconfirmed rumors about the alleged total failure of the company’s latest iPhone release than even the Trump Administration is sustaining from Bob Mueller’s sieve-like, 100 percent pro-Hillary Democrat “investigative” team.

Both situations seem equally suspicious. For that reason, we plan on adding to our growing AAPL position should shares continue to decline to $149 per share or lower in the near future.

On a more positive note, however, at the risk of triggering a backlash from Mr. Market, we’ve been thrilled today at the massive rebound in the price of our Allergan convertible preferred “A” shares (AGN/PRA, your broker’s symbol may vary), which, over the last couple of weeks, have been battered by a plus-100 point decline. Given that this is a large position for us, this virtual crash in the shares has made the aggregate of our several portfolios look terribly sick.

But late last week, as the selling frenzy in both the preferred shares and the common shares (symbol: AGN) of this giant, Irish-headquartered American pharmaceutical company went into overdrive, both we and the charts seemed to be signaling a short- and intermediate-term bottom in the shares and even picked up a few more to average down our total purchase price, which is now down to $797 per rather expensive share, give or take a few cents.

As we write this, buyers appear to be swarming back to the grossly oversold AGN common shares, which currently sit at nearly $211 and change per share, up $6.07, which puts the shares in the plus column by a full 3 percent. Shares were actually as high as $213+ on the morning’s opening surge before settling down a bit.

Since any convertible preferred is linked to the price of a company’s underlying common shares, the higher priced shares of AGN/PRA moved even more strongly, given that each preferred share reflects over 3x the price of AGN. AGN/PRA shares are currently up about $25.50 per share, which is the main reason why our portfolios are way up today, as compared to the average portfolio on this negative trading Monday.

Also helping today are our positions in Home Depot (HD) and Lowe’s (LOW), with both up sharply once again today, reflecting speculation that these DIY home improvement giants will be doing an awful lot of business in Houston and Florida over the next year or so, as hurricane-battered homeowners and businesses try to put their badly damaged properties back into watertight working order.

We have also been attempting to buy shares of wood, plywood and strand board standby Louisiana Pacific (LPX). But they’ve been on an upward sprint lately, just like HD and LOW. So unless we catch the shares on a bad day, we’re not likely to chase them. Please come down just a bit, LPX, so we can feel better about establishing a position, okay?

 

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