Slow down Carl: Not all Apple shareholders want an big share buyback

“Carl Icahn has been pushing Apple CEO Tim Cook to use the company’s $158 billion war chest to buy back company shares, and hopefully substantially boost its stock price,” Mark Berniker reports for CNBC. “But not every Apple shareholder agrees with that strategy, and at least one big one doesn’t appreciate Icahn’s activism.”

“‘It’s the tail wagging the dog. [Icahn’s] recent letter was rambling and contradictory,’ says Anne Simpson, senior portfolio manager of investments and director of corporate governance for the California Public Employees’ Retirement System,” Berniker reports. “CalPERS is the largest pension fund in the United States with more than $285 billion in assets under management, and it owns close to $1.6 billion in Apple shares.”

“‘There are owners, raiders and traders. We’re an owner and have been of Apple for a very long time. Mr. Icahn is a raider and he’s an echo chamber who engages in megaphone diplomacy,’ Simpson added,” Berniker reports. “CalPERS is not the only Apple shareholder who’s doesn’t think Ichan’s call for a buyback is good for the company, or its stock. ‘It’s not always in the shareholders best interest for the cash hoard to be returned to shareholders,’ said Matt Patsky, CEO of Trillium Asset Management, which owns 44,000 Apple shares worth more than $20 million. ‘Apple is resistant to depleting its cash reserve and they have that right,’ he said.”

Read more in the full article here.

[Thanks to MacDailyNews Reader “Arline M.” for the heads up.]

28 Comments

  1. Icahn is buying more Apple shares because he thinks he’s going to force Apple into declaring a larger dividend. That didn’t happen, so he’s going to take what he can and then make more noise, hoping for a larger dividend next Q.

    I hope Apple tells him to shove his stock up his Icahn. Apple knows far better than Icahn what it needs to do to succeed, and Apple’s success is not measured in whether its shareholders profit as much as they want to.

    1. So far Apple has spent something $100B on buybacks, which should prop up the stock price. So we lost only $50 per share instead of $100. That’s a poor use of capital. As someone with quite a bit of AAPL I’d really appreciate a dividend of say, $6.00 per share. Apple’s cash would still grow every quarter.

      1. So far, Apple has spent (“more than”) $43B on buyback and dividends combined, of which $28B were on buyback, by which 56.5M shares were retired (6% of the shares before the start). (Oppenheimer, 1/27/2014)
        just to get the facts right.

    2. Actually when you have a private company you can pretty much do as you wish as long as you own the company. Once you take your company public then shareholders fund your company. Apple, Microsoft, Netflix etc. could never have grown this big without going public. That’s a choice that is made when you decide to go public. If you don’t want to deal with shareholders then don’t sell stock in your company. You can’t take the shareholders money and then act as though they don’t exist. You may come up with a better mousetrap but without a lot of money you won’t ever be able to ramp up production, market those mousetraps, advertise etc. To get that money you have to sell shares of stock in your company. You can’t have it both ways. Once you take the public’s money as partners in your company you have a responsibility to do your best to reward the shareholders. They didn’t loan you the money, they invested with the intention of making a profit. If you don’t want that responsibility don’t take your company public. Borrow the money from your rich uncle Fred. Profit, it’s why you buy shares of a company. You hope to profit. Employees of Apple expect to profit from their hard work every day. They may make insanely great products but they expect a paycheck. Just like all the rest of us, hopefully, they want to work on interesting things and do the very best that they can. Most of us take great pride in our work. I certainly do. I take as much pride in my work every day as anyone that works at Apple. But they still need to make money. They still need to profit from their efforts. Profit is not a dirty word. And believe it or not, Apple is just one of thousands of companies that makes insanely great products and takes great pride in doing same.

  2. I’d already cast my vote for Carl Icahn’s increased buyback: AGAINST!

    I’m in favor of Apple doing almost anything else with that unused cash reserve except stock repurchases.

    *****When a company does repurchase shares, it will usually say something along the lines of, “We find no better investment than our own company.”*****

    I’m in agreement with @Zeke

    Apple appears to be the only one buying Apple shares and that pretty much sucks because they’re pouring countless billions into their company and the share price continues to fall. I can’t even get my head wrapped around something like that.

    Apple could have bought a couple of services companies and seriously beefed up their infrastructure for $60 billion. Right now it’s as though Apple is just spending money so the rest of Wall Street can take it from Apple and put it into Google. Unbelievable. I’d swear Apple doesn’t know what it’s doing although I’m sure they must have someone with better money management skills than I have.

    1. I’d like to see them do something constructive with some of that huge pile of cash. Buy more shares, increase the dividend, buy Netflix? Just do something with some of that. That’s way too much cash to have on hand. I respect anyone or company who manages their money intelligently. One should always be frugal when possible. Seems to me that letting that much cash amass is fiscal irresponsibility. Unless they truly have some huge acquisition or production costs in the future, take a chunk of that money and do something with it. If nothing else, straighten out your production for new products. It’s getting to be an old story with lack of product every time a new one is released. Inability to meet demand has really been the problem the last several years with AAPL . IMac, iPad, iPhone, iPad mini, Mac Pro etc. Without production problems the last 2 1/2 years AAPL would not be in the toilet today. Yes they need to promote their products better. Yes they need someone doing that besides Tim Cook. And of course it will always be nice to have a new revolutionary product. And perhaps they need to hire a few more engineers to expedite matters? Thorough doesn’t always mean slow. But the real problem with AAPL and Apple is the inability to provide enough product for the consumers to purchase. Until that is fixed or a revolutionary product is suddenly dumped on us, the stock is going nowhere. Nowhere.

      1. You are such a dick GM, you don’t have a clue about Apple.

        Prode in your work? You are as despised for your hubris and arrogance in trailer production as you are here in MDN. Can’t you ever stop talking about money and yourself, you are a two bit option trader that wouldn’t understand investment if it bit you, because you borrow to play, hence you doubt every long term Apple supportive and Apple rich investor that patiently accumulates and prospers with full confidence in the company. When Apple’s financial empire one day soon becomes evident, you’ll still be whining and FUDing to your little mind’s content while never ever reaping the real rewards that most of us have over many many years…

        Bet you never put your money where your mouth is and bought 4 Mac Pros like you said you needed desperately when you whined here that Apple wasn’t fast enough to produce them for YOU. Idiot.

        1. Prode? Trailer production? Goodness Jim, you certainly are upset about your losses in AAPL. That’s a shame. Option trader? I don’t borrow money to invest in AAPL I use my own money. You don’t understand investing. If you did you wouldn’t be underwater in AAPL. And it was three Mac Pros not four. So I do put my money where my mouth is Jim. I use the insanely great products from Apple to make a living Jim. Your jealousy is showing Jim. Hubris Jim? Perhaps you should go back and read your own posts? My goodness,such angst. Such anger. Learn to take responsibility for your actions in life. Just because you’ve lost a lot of money doesn’t mean that you should try to blame others. That kick in the stomach feeling you have every morning when you look at AAPL doesn’t need to ruin your life. It’s not our fault. I’ll bet you kick the dog because you’re mad too don’t you? Cheer up Jim. Tomorrow is another day. Try buying and using some of those insanely great products that I use from Apple. Even if you only surf the net and send email. Put your money where your mouth is Jim.

          1. How and why would a busy proud professional like yourself GM have so much time on his hands to regularly frequent an Apple website with so much disdain for Apple investors and fans? What kind of sick MO would motivate your negative, condescending, hateful resentful and mocking-full ego filled posts?

            Such sadistic pleasure at the mere supposition (of a ” kick in the stomach feeling every morning watching Apple’s stock underperform…”), inflicted on anyone who supposedly lost money because of a consorted attack on AAPL is testament to what a malice intending asshole and person you are GM.

            You are no Applehead, fan or investor and apparently the resentment you get here is indeed warrated.

            Fuck Off.

  3. You have to see all sides to tell if a buy back is good, overall.

    As long as the shares are low, Apple can buy them now and sell them later and make a profit and it does not have to pay a dividend to itself.

    Ps. The SEC makes companies go thru hoops to sell a set amount of stock. But buy it back and you can resell it with out their approval.
    Just saying.

  4. i like anne simpson. it’s not true that everybody’s lost their head. there are still some people who haven’t lost theirs …and when they speak, common sense suddenly seems self-evident.

  5. I cannot understand this guy either. Great tech companies benefit their shareholders by making great products, which in turn increases the stock price. For people like Icahn, he will bleed the company dry and then move on to something else. Tim Cook stand your ground on this one. We/I don’t need a heavier dividend.

    We need stock price appreciation, attained by your current stock buy backs and making insanely great products.

    1. My view of Carl: He won’t be happy until Apple is leveraged to the hilt. No cash horde. Massive debt. Ready for bankruptcy and take over. He doesn’t give a rat’s about Apple the creative company or its customer vision. He doesn’t give a rat’s about Apple’s future. He doesn’t give a rat’s about other stock holders. He just wants the vacuum that is his sad little heart filled with green paper bills.

      1. I agree. Why does he want Apple to buy back more shares, especially after announcing he won’t be selling his? So that his percent of ownership goes up. What does he do with that? Get a seat in the board. From there he can tear the company apart and sell it off to his gain and the hurt of everyone else.

    2. When the benefits of borrowing at very low interest rates in addition to the tax write off from it is greater than the dividend than you are paying on the stock, it should be a no brainer to borrow and buy as much stock as you can while this lasts. This is what Icahn is pushing for. It’s better than sitting on a massive cash pile earning earning next to nothing in interest. The buy back helps to support the stock while Apple attempts to reclaim its growth.

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