“Apple Inc (AAPL) has gone from stock market darling to market dog in the course of a year’s time,” Alexander J. Poulos writes for Seeking Alpha. “Has the market overreacted, giving patient long term investors an attractive entry point or is this the beginning of a slow decline into irrelevancy?”
“I believe the former is indeed the case,” Poulos writes. “Carl Icahn recently disclosed a new stake in the company sending the shares up over 4%. Icahn has a well deserved reputation as a corporate agitator. It is my belief that he will push for a more aggressive buyback policy further enhancing shareholder value. AAPL has aggressively repurchased shares since its April commitment to do so. I expect Icahn to push for more rapid change, especially with shares trading at less than market multiple. According to Morningstar, AAPL has ample room to take on debt, especially long term debt. I expect Icahn to aggressively push for more debt to be added to fuel an even more aggressive share buyback. I wouldn’t be surprised if he forces them to double it to $100 billion, which is unprecedented in history.”
Poulos writes, “With a host of new products slated for the next couple of quarters sales momentum should reignite. AAPL, with its wide moat and prodigious cash flow generating ability should trade for at least a market multiple. In summary, AAPL at its current level offers an attractive entry point into a high quality technology leader. A patient investor will be paid above market rate yields to wait for the inevitable bump in sales. The small investor now has a champion agitator with a proven record of results pushing for a higher share price. Management won’t be allowed to dither and will have to perform.”
Read more in the full article here.
MacDailyNews Take: This isn’t Dell, thank Jobs.
Apple has a market cap of $445 billion. Icahn reportedly has just over $1 billion in AAPL. His “large” stake is actually around 0.22% of Apple; not 20%, not even 2%. He’d need to quadruple his current “large” stake just to get to 1%.
Icahn’s stake is “large” to him, not to Apple. To Apple, it’s a drop in the ocean.
So, while he can squawk on Twitter and other media, less than a quarter of one percent doesn’t buy him a lot of financial leverage to “force” Apple to do anything beyond a yawn. At 0.22%, he’s lucky Tim even bothered to pick up the phone.
Related articles:
Billionaire Carl Icahn says Apple shares could trade at $700 with increased buyback program – August 13, 2013
Carl Icahn spells the end of an era at Apple; this is the end for the Apple that you knew and loved – August 13, 2013
Carl Icahn reveals large Apple position, reportedly over $1 billion; wants to see Apple increase stock buybacks – August 13, 2013
Apple stock goes vertical: The Carl Icahn effect – August 13, 2013
With any luck, Tim Cook will talk nice to Icahn and then totally leave him out of the picture. The man is only focused on his billions and that alone. Apple could crash as a company as long as he got his billions.
Tim, your doing great. Stay the course.
Just like he did to Einhorn….
What’s all this about Carl Icahn “forcing” Apple to do something? I don’t understand. I have some shares, and an iPhone, can I force Apple to do my bidding?
If you own enough shares, you could. Icahn acts as if he owns enough shares, but, as MDN points out, he does not. Instead, he has hubris and a complicit media.
“The small investor now has a champion agitator with a proven record of results pushing for a higher share price.”
If *anyone* believes this statement they are more of an idiot than Neville Chamberlain was. Carl Icahn has absolutely *ZERO* interest in the small investor. In fact, many of his actions over the years have clearly shown that as long as a stock move helps him he does not care what it does to the company or small investors.
Any author who would right such drivel should be soundly beat about the head and shoulders with his own print — preferably printed onto something extremely sturdy.
And about the thought of Apple taking on $100 billion in debt? One of Steve Jobs’ driving tasks was to get rid of *all* long term debt. If Cook or the board push for anything even close to this, I hope there are such things as ghosts and that Steve Jobs comes back and haunts each and every one of them until they are firmly in *their* graves!
Amen Shadowself! The most idiotic statement in article is “Management won’t be allowed to dither and will have to perform.” They are performing – making great product, taking care of customers and putting money to bottom line. This crap of manipulating money in order to satisfy jerks like Icahn is long term counter productive (except for short term thinkers, like most everyone on Wall Street). Let Apple concentrate on doing what they do best — removing focus from that is going to prove to be a disaster.
Yup
I don’t understand when AAPL was $385, where was Carl ICaln, why didn’t he tweet, now all of a sudden he came out of no where tweeting?. This doesn’t make sense at all?. Is there some thing fishy here?. Can someone explain?.
He’s tweeting now because he knows that Apple is about a month from a big product announcement and the stock is very likely to rise. This way it looks like his tweets were the spark for the beginning of the run, and he hopes to gain influence/credit from that.
Why is it that turds like Icahn don’t “force” Apple to do things like build products of even higher quality, provide even better customer service and so on? You mean all he cares about is his money? Tell him to cram a Surface into his only useful orifice.
My sentiments exactly!
Jesus, who cares? Just let the man talk, I need a new bike! 😉
Apple management does not “dither”. 😎
Hey, this could be a good thing. If Icahn’s involvement boosts the stock price, the board would relax and be more likely to leave Cook alone and let him do his job.
My biggest fear about Apple would be the board going short-sighted and demanding immediate stock gains. Apple has gotten where it is today by taking the long view. Hopefully, a nice bump in the stock price will ensure they stay focused on that long view.
——RM
Thanks Carl, now I can get the new sun room built.
Finally Mac Daily News gets on the ball.