Why You Shouldn't 'Get Excited About Owning Apple's Stock'

Unlike several large and individual investors, Eric Jackson, Ironfire Capital, doesn't own any Apple Inc. AAPL stock and he doesn't see any reason to own it at this point. Jackson was on CNBC recently to explain why.

Tim Cook Made A Big Mistake

"I like the company," Jackson. "I like all the operational directors that Tim Cook has made. I think, Apple TV is a great product and will be a great product when it comes, but I don't own the stock and I can't get excited about owning this stock, because I think the one big mistake that Tim Cook has made over his tenure as CEO is that he has wasted now $130 billion on Apple's dividends and stock buyback policy. I don't think it has created any extra value for shareholders."

He continued, "And one interesting thing is if you look back to September of 2012, almost 3 years ago and you look at their cash levels were about $120 billion then. They are $200 billion now, so they are up $80 billion, but they have taken on another $55 billion on a credit card in terms of debt to fund their buybacks."

M&A, Not Just Financial Engineering

Jackson reasoned how Apple raising debt to do its buyback was a wrong move even though it raised the debt relatively cheap, saying, "The increase in market-cap between that point and now is about $150 billion. So, it's equal to this kind of bump in cash and the debt that they have taken on."

"So, Apple, even though its EBITDA is about 50 percent more than it was almost 3 years ago, it's still valued the same thing. I think, they should have been using that $130 billion on M&A and, I think, that's something that investors would get excited about, not just this financial engineering," Jackson concluded.