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1/ When it comes to Wall Street research notes, sell-side analysts have wide discretion. The editorial that is applied is primarily related to ratings & target prices. Accordingly, some notes will be flawed - containing theories / ideas about a company that don't make sense.
2/ There are two groups in a position to truly push back against a sell-side analyst's flawed note: Buy side clients and the analyst's equity sales team. Equity sales are mostly generalists though. Few will dive deep into specific companies. Don't expect much pushback from them.
3/ As for buy side clients, they will only push back at first. If they sense you are clueless about a company or sector, they will eventually ignore you and move on. Your equity sales team will gradually ignore you as well since they need to keep their buy side contacts happy.
4/ When looking at this latest note from Bernstein's Toni Sacconaghi, one wonders if there is anyone left pushing back at what is flawed "research."
There is no value found in comparing a metric like M&A as a percentage of free cash flow between Apple and its peers.
There is no value found in comparing a metric like M&A as a percentage of free cash flow between Apple and its peers.
5/ Apple is where it is today because of a very disciplined M&A strategy. As for free cash flow generation, Apple has a dramatically different business model versus peers. Apple has the best business model for generating free cash flow. https://www.aboveavalon.com/notes/2017/8/15/apple-has-the-best-business-model-for-generating-cash
6/ My suspicion is Sacconaghi knows he is viewed as some kind of devil's advocate. His goal isn't to understand Apple. Instead, it's to generate contrarian views about Apple. If it works for him, great. The problem is that even his contrarian views about Apple don't make sense.
7/ As for the "why" behind it all - look at your TV. You have a better shot of appearing on CNBC by publishing a controversial note. It doesn't matter if the note is flawed. Managers love it when their analysts appear on TV.
