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Doug Kass: Apple Looks Like Microsoft in 2004
CNBC.com | March 19, 2012 | 06:22 PM EDT

Apple bulls may not like this. Widely followed investor Doug Kass sees similarities between Apple and Microsoft in 2004.Here’s the thought process.“I viewed the Apple capital allocation as Microsoft redux – if you go back to July 2004 you can use Microsoft as a template for Apple,” says the Seabreeze president and CNBC Contributor.

“It’s another a large cap tech company – admittedly not with the stellar growth prospects as Apple – but it too was flush with cash. And they did a $75 billion capital move – which is far greater than Apple’s – doubled the cash dividend, announced a $13 billion stock buy back."You'd think that would drive shares higher over the next few weeks, right? Not so.

In 2004, Microsoft shot higher only to drop steadily for the next 2 weeks. “It gapped higher to $29.5 but then, two weeks later, it was back down to $27,” Kass explains. That's about an 8% decline.

If Kass is right, Apple could trade down to around $550 in a fortnight.

And Kass is putting his money, where his mouth is. “I shorted the stock around $605 and covered some at $583 – but I’m still short,” he says.

* Kass is also president of Seabreeze Partners and a contributor to the Street.com, Jim Cramer’s Real Money Pro web site.-------------------------------------------------------------

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