Let’s take a look at the latest quarterly changes in Apple’s cash hoard.
| Q1 FY2013 | Q4 FY2012 | Pct. Change (q/q) | |
| Cash | $7.1 | $3.1 | 129.0% |
| Money market funds | 3.7 | 1.5 | 146.7% |
| Mutual funds | 3.7 | 2.4 | 54.2% |
| U.S. Treasury securities | 22.9 | 20.1 | 13.9% |
| U.S. agency securities | 20.6 | 19.5 | 5.6% |
| Non-U.S. government securities | 4.7 | 5.5 | -14.5% |
| CD and time deposits | 2.3 | 2.2 | 4.5% |
| Commercial paper | 2.1 | 2.1 | – |
| Corporate securities | 49.4 | 46.3 | 6.7% |
| Municipal securities | 6.1 | 5.6 | 8.9% |
| Mortgage and asset-backed securities | 13.7 | 11.9 | 15.1% |
| Total assets invested (including cash) | $136.2 | $120.2 | 13.3% |
The immediate takeaway from these numbers is the abnormal change in Apple’s pure cash position. In its typical asset allocation over the past three years, Apple has held roughly $1.5 billion to $3 billion in cash. The company now holds more than $7.1 billion in effective cash. Moreover, Apple also holds a significantly larger chunk of its investable cash in money market and mutual funds, about $7.4 billion combined. This total is also far above the company’s three-year average of $3.3 billion.
In fact, when we measure the size of Apple’s holdings in these highly liquid asset classes, we can see that their size has now eclipsed $14 billion, more than twice that of what should be considered “normal,” at least in recent years.
It’s helpful to think of this major shift another way. Consider the fact that Apple’s total cash hoard increased by $16 billion last quarter. Of this inflow, nearly half of it was allocated to cash, money market, and mutual funds. The inordinately large allocation of this past quarter’s cash to highly liquid asset classes indicates that perhaps Cook is about to either (a) make an acquisition or ramp up its share buy back program.
Of course, a strategic acquisition shouldn’t be ruled out either, but with optimism on Wall Street that income seeking investors will receive a higher payout by the end of 2013, it’s hard to ignore the telltale signs in Apple’s latest 10-Q.