Apple: Between Icahn and a much harder rock

“Carl Icahn is like an acquaintance that you never hear from until you have something that they need,” Benedict Tubuo writes for Seeking Alpha. “The modus operandi of those types is to show up, schmooze, and then tee you up for the obvious request that you knew from the outset was coming.”

“Carl Icahn is one half that acquaintance and the other half your nightmare,” Tubuo writes. “He is the Czar of activist investing and is of the ilk that shows up when you are vulnerable and holds your head down until you succumb. He is unpretentious and does not beat around bush. He shows up, buys up enough of a stake in your company, states his claim and then goes for broke. But, unlike the aforementioned acquaintance and through Icahn Enterprises L.P. (IEP), investors are afforded the chance to share in Icahn’s greed.”

“Icahn Enterprises returned a lofty 129% in 2013, which clearly indicates that Icahn barks to bite not to scare,” Tubuo writes. “In the matter of Icahn versus Apple Inc. I, however, believe that Icahn is putting Apple in a conspicuously precarious position that might benefit him but ultimately be disastrous to Apple. Not that he cares but I thought I should point it out anyway.”

Read more in the full article here.

12 Comments

    1. Icahn already made the mistake of buying before earnings in this case… but if he is long… no problem… but yesterday he and his friends lost a ton…

      on the other hand, put option buyers had a nice one day profit.

      He should stop begging…
      Apple needs to get a way to invest in some display tech and get away from giving $ to Samsung… enough funding their biggest competitior. They have gone that direction with in getting some Ad dollars away from Google, but it is time to get Intel on board and away from Samsung.

  1. You know, as much as I would hate to see Apple stock drop –
    It would nice to see everyone sell out, and watch Icahn lose all his money. Apple could buy back all it’s shares just to screw this guy over. 🙂

  2. Apple Thinks Different. If Tim Cook gets pissed enough, they would let the share price collapse and watch him get wiped out (I’m assuming Carl has overleveraged himself).

    Tim, Make It So.

  3. Yes to the above. Agreed. But don’t underestimate someone like Icahn. He might not succeed as he would with a company with less market cap (and one more thinly traded). But there are some big time investors whose moves you want to watch closely – they’re not stupid, and they tend to win.

    For example, yesterday, amid all the rancor and hand wringing, Icahn seized the moment and added to his Apple position at a much reduced price. Even if he does not get his way with his dividend and buy-back proposal, buying on the dip will net Icahn a handsome profit.

    Warren Buffett said famously that investors should “be greedy when others are fearful” and this is a good example. Instead of freaking out over Wall Street’s reaction to Apple’s guidance, and the prospect of a slowing market globally for smartphones, shrewd investors can take advantage of the fear. I’m still kicking myself for not buying Netflix in 2012 when its price dropped dramatically. Those who did made gigantic profits the following year.

    If you believe in a company like Apple, and I mean really believe that its future prospects are bright, shrug off Wall Street’s reaction to the earnings announcement and call, and hold on to your position. Consider adding to your holdings if you feel strongly. I believe that the stock market is neither rational nor efficient. And for a contrarian investor, the irrationality of Wall Street creates opportunities at moments when things look dark. It means not thinking like the herd, and instead of losing your mind over news and hype, keep calm and take advantage of the chaos.

    That’s true for Apple and many other companies in which you could invest.

    As for Mr. Icahn, I suspect that he’ll get Apple to up the ante a bit on dividends and buy-backs, likely more with dividends.

    Over time, Apple will steadily increase the payout ratio on its dividend, and stockholders will feel the positive impact of the massive buyback program that Apple is undertaking. For the patient investor who holds Apple stock for years, and who reinvest their Apple dividends, the rewards will be significant. And for Mr. Icahn, he’ll pocket a big profit when he cashes out his Apple position after he gets what he wants.

    You can profit too. Stay calm amid the chaos. In fact, capitalize on Wall Street’s overreactions. Watch what the big guys are doing and consider copying their moves, or investing in them as a proxy. Reinvest all your dividends.And be patient. Some years from now, you’ll smile.

  4. I think apple is in a strong enough position to fight off an inside trader like Icahn. The fact that Icahn and Wall Street is moving as one unit means that the apple stock being in a flux is an organized and coordinated attack on Apple.

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