Apple Financial Services

Apple Will Handle Lending Itself With New Pay Later Service
Company subsidiary to conduct credit checks and make decisions

Apple will handle the lending itself for a new “buy now, pay later” offering, sidestepping partners as the tech giant pushes deeper into the financial services industry.

A wholly owned subsidiary will oversee credit checks and make decisions on loans for the service, which is called Apple Pay Later. The business — Apple Financing LLC — has necessary state lending licenses to offer the feature, though it operates separately from the main Apple corporation, the company said in response to Bloomberg questions.

The move marks the first time Apple is handling key financial tasks like loans, risk management and credit assessments. It’s a significant shift for a company that got its start selling computers. Until now, Apple’s financial services have been backed by third-party credit processors and banks. The Apple Card credit card, for instance, relies on Goldman Sachs Group Inc. for lending and credit assessment.

https://www.bloomberg.com/news/articles/2022-06-08/apple-wil…

Extending the walls of the “walled garden”.

I re-opened an AAPL position after hearing Mr. Buffett say at AM he bought more in Q1 (likely around $150/share).

Anyone else buying here?

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I re-opened an AAPL position after hearing Mr. Buffett say at AM he bought more in Q1 (likely around $150/share).

I think it unlikely they got that good a deal.
If it was in Q1, it didn’t trade that low.
A better guess might be average $160? Conceivably as low as $155 if they were very nimble, though it would have had to have been a very quick high-volume pounce.

Either way, good to point it out. Today’s price under $146 is lower.

Jim

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Yep and I bet WEB bought more on the weakness.

" I re-opened an AAPL position after hearing Mr. Buffett say at AM he bought more in Q1 (likely around $150/share).

I think it unlikely they got that good a deal.
If it was in Q1, it didn’t trade that low."

AAPL traded as low as $152.00 on February 24th. Trading volume on that day was 141 MM shares.
It traded as low as $150.10 on March 14th. Daily trading volume was 108 MM shares.
(Source Yahoo)

I assume Mr. Buffett has instructed Mark Millard execute limit orders only?

"Conceivably as low as $155 if they were very nimble, though it would have had to have been a very quick high-volume pounce.

After digging further, once again you are likely correct.

"Berkshire Hathaway’s chairman and CEO told CNBC’s Becky Quick that he scooped up $600 million worth of Apple shares following a three-day decline in the stock last quarter. Apple is the conglomerate’s single largest stock holding with a value of $159.1 billion at the end of March, taking up about 40% of its equity portfolio.

“Unfortunately the stock went back up, so I stopped. Otherwise who knows how much we would have bought?” the 91-year-old investor told Quick on Sunday after Berkshire’s annual shareholders meeting."

https://www.cnbc.com/2022/05/02/buffett-bought-more-apple-la…

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I assume Mr. Buffett has instructed Mark Millard execute limit orders only?

For big orders, my understanding is that they tend to be of the form “buy Y% of volume when the price is below $X”.
This matches my analysis of known data point on buybacks, and is consistent with one of his later comments.

Though it might be “Oh, look, the price is below $X–Mark, go buy Y% of volume till I tell you to stop”. (but in any case don’t pay more than Z!)

Jim

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I re-opened an AAPL position after hearing Mr. Buffett say at AM he bought more in Q1 (likely around $150/share).

Anyone else buying here?

It’s funny because people usually assume, like you did here, that Warren Buffett bottom-ticked Apple stock during the quarter since he is thought to be such a price sensitive guy. But in reality, according to the NAIC filings of Columbia Insurance Company, he paid $167.3 per share on 2/22/2022. That was only for $30 million worth, but he tends to do this type of buying in clusters/bursts and then stop.

The move marks the first time Apple is handling key financial tasks like loans, risk management and credit assessments. It’s a significant shift for a company that got its start selling computers. Until now, Apple’s financial services have been backed by third-party credit processors and banks. The Apple Card credit card, for instance, relies on Goldman Sachs Group Inc. for lending and credit assessment.

It’s an interesting shift into a completely different business. I wonder how large they plan to make that business line? Consumer lending requires considerably different competencies than the rest of their business and it entails a different collection of risks. Apple has piles of cash, so that’s quite helpful for this move. But, I do wonder whether the vision is to extend, say, $30 billion of consumer credit, or whether they are thinking of, say $300 billion as their objective? The business of extending unsecured consumer credit is great right up until the point that it isn’t! Hopefully they’ve hired a team of smart and experienced people to build the business and manage the risk.

SJ