“Billionaire activist investor Carl Icahn tweeted on Tuesday morning about his dinner with Apple’s CEO Tim Cook. Carl Icahn had continued to put pressure on Tim Cook for a $150 billion buyback of Apple’s (AAPL) shares,” Junius writes for Seeking Alpha. “Although the two did not come to any agreement, they have promised to continue their discussion in the next few weeks.”
“In a CNBC interview, Carl Icahn explains that a stock buyback for Apple was a ‘no-brainer’ and it ‘makes no sense’ not to do so, given that the company trades at such low multiples,” Junius writes. “Icahn explains that the current low interest rate environment means that it is a ‘golden opportunity’ to fund such a large scale buyback, and that this opportunity is not going to stay around forever.”
Junius writes, “While Carl Icahn’s call for greater return of capital to Apple’s shareholders is not new, continued pressure from reputable activist investors, including David Einhorn, should make the merits of greater shareholder redistributions clear to Apple’s management. The ability to obtain funding for a massive stock buyback at the currently low interest rates is not likely to stay around for much longer, and these conditions have been historically extremely rare. Apple’s currently low valuation multiples further strengthens the case that the timing for such a buyback is unlikely to get much better.”
Read more in the full article here.
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