Wednesday, May 1, 2013

Apple creates the world's largest ever equity swap

HK iBond © fintag

News comments:
2009...
"We fully support the legislation … on offshore tax centers, and we look forward to working with you as part of the broader effort to address international tax evasion and close the tax gap," Geithner told the House.

2013...
CEO of Apple, Tim Cook (TC): Just got another call from a hedge fund manager screaming for a dividend cos' he got his short wrong.
CFO of Apple, Peter Oppenheimer (PO): Just been sent an email from Microsoft saying they are looking to buy us out because they see us as a distressed stock.
TC: Looks like we have got to get our stock price up and pay some dividends. Any ideas?
PO: Not sure about dividends as once you pay them the investors expect them to go up every year. And anyway, our cash is stuck offshore and if we bring it to the US, our tax liability will bring us down. What we need is to flip their equity into debt.
TC: How do we do that then?
PO: We call a friendly bank with lots of free ECB, BoE and Fed cash wanting to lend it out at a few bips and then we use this to buy back truck loads of our stock. We then issue debt and pay the banks back and pay the coupons with US generated income.
TC: So we get to keep our rainy day cash in Cayman. Excellent.
PO: Its what I call the iSucker trade. We can continue to avoid paying tax, use free printed money provided by our new best investment banking friends who will do us favors and ensure their analysts pump out Buy recommendations, we keep our jobs, our stock options come into the money and everyone is a winner.
TC: Using government money to pump up our stock price... Jobs would be proud of you.

Today's shorts:
Tax avoiders win again (reuters)

Today's longs:
Goldman wins again (wsj)

Gossip:
Google to launch new Glass for people with one eye called a video camera.



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