Earlier this week, the financial press was over the moon about a Citigroup equity research department report. The completely unironic title: "Addressing the Problem of Too Much Cash."
In the report, analysts Jim Suva and Asiya Merchant discuss the possibility that post-tax-reform Apple Inc. (Nasdaq: AAPL) brings home its $220 billion cash stockpile that is currently overseas and uses it for a takeover of other media or technology companies.
The two intrepid research analysts tell us, "the firm has too much cash - nearly $250 billion - growing at $50 billion a year. This is a good problem to have. Historically, Apple has avoided repatriating cash to the U.S. to avoid high taxation. As such, tax reform may allow Apple to put this cash to use. With over 90% of its cash sitting overseas, a one-time 10% repatriation tax would give Apple $220 billion for M&A or buybacks."
Oh, boy! Well, that is kind of the obvious answer, but this sounds like great news for shareholders. Right?
About the Author
Tim Melvin is an unlikely investment expert by any measure. Raised in the "projects" of Baltimore by a single mother, he never attended college and started out as a door-to-door vacuum salesman. But he knew the real money was in the stock market, so he set sights on investing - and by sheer force of determination, he eventually became a financial advisor to millionaires. Today, after 30 years of managing money for some of the wealthiest people in the world, he draws on his experience to help investors find "unreasonably good" bargain stocks, multiply profits, and build their nest eggs. Tim tirelessly works to find overlooked "hidden gems" in the stock market, drawing on the research of legendary investors like Benjamin Graham, Walter Schloss, and Marty Whitman. He has written and lectured extensively on the markets, with work appearing on Benzinga, Real Money, Daily Speculations, and more. He has published several books in the "Little Book of" Investment Series and a "Junior Chamber Course" geared towards young adults that teaches Graham's principles and techniques to a new generation of investors. Today, he serves as the Special Situations Strategist at Money Morning and the editor of Peak Yield Investor.