Here’s why Carl Icahn wants even more Apple buybacks and why CEO Tim Cook has to pay attention

“Investor Carl Icahn has sent an open letter to Apple’s CEO, Tim Cook, with lots of nice things to say about the iPhone 6 and the Apple Watch. But also this: He’d like shareholders to get paid, please, and faster,” Pat Regnier reports for MONEY. “Icahn controls 53 million shares of Apple, worth $5.3 billion, which gives him about a 0.9% ownership in the company. In his letter, Icahn lays out his reasons that Apple should repurchase its own shares.”

“Apple has a lot of cash. Or, technically, cash plus other short-and long-term investments. The point is that this is money not currently tied up in Apple’s business, but sitting in a portfolio,” Regnier reports. “The Icahn argument, essentially, is that no one needs Apple’s expertise as a de facto fund manager. As MONEY wrote back in June, add up Apple’s $164 billion portfolio and it’s bigger than any U.S. bond mutual fund beside the giant PIMCO Total Return.”

“Icahn’s less than 1% stake might not seem like much, but Icahn is deft at using his position to rally other investors to his side,” Regnier reports. “He’s public about what he wants for a very good reason — when he comes into a stock and starts talking about ways the company could enrich shareholders, other investors follow. That alone can help boost the share price, as well as building a constituency for the changes he’s demanding.”

Read more and see the video in the full article here.

Related articles:
Icahn’s Apple assumptions met with skepticism on Wall Street – October 9, 2014
Jim Cramer: Carl Icahn is ‘assaulting’ Apple – October 9, 2014
Icahn: iPhone 6/Plus to hurt Android, Apple severely undervalued, increased buybacks urged – October 9, 2014

18 Comments

    1. Well he is actually doing a service to all Apple shareholders.

      No I don’t think Tim Cook should worry about Icahn at all, but Icahn is publicizing how much more valuable AAPL is than its current price. I can’t see how that hurts anyone.

  1. If he wants more money out of Apple, Icahn should first write to Congress and get them to authorize a repatriation holiday, or better yet to re-write the corporate tax code so that US businesses are not at a tax disadvantage on international sales.

    1. From my POV, Carl is some level of sociopath. He’s totally off the wavelength of positive business and invention. The guy just wants the money and of course would be perfectly happy to have Apple drop dead, become a bloated corpse, exploding and spraying money all over him. He’s a financial gaming fanatic. The positive aspects of the real world are beyond his immature comprehension. Or so say I.

  2. I -a shareholder since single digit stock price days- would prefer Apple invest the money in a broadband fiber to the door company to bypass CONcast and the others here in the US as a wholly owned subsidiary. Then spin it off and reap the return after disrupting the entire ISP/Cable industry.

    Doubt it will happen, but Apple has the money and it would make a truckload of money.

  3. Before you write off Carl Icahn as a sociopathic nag, do more homework on him. Agitation is his style, but it’s generated tremendous profits for his company and stockholders of Carl Icahn Enterprises. And did I mention that he is a self-made billionaire? By making noise like this, stockholders of the company he’s poking often have done extremely well. If you are an Apple stockholder, as I am, that would mean you.

    Icahan can’t take a substantial position in Apple – the company is simply too big. It means that he can’t lead a leveraged buy-out or have enough clout to change the company’s board of directors. But as the article suggests, he can try to rally institutional investors and hedge funds to join him. My hunch is that he’ll get a mild response.

    Carl Icahn Enterprises is having a sluggish year with its investments, of which Apple is one. He may be doing this to juice up his company’s stock as we approach the end of the year. Agitators, corporate raiders and short sellers often use the media (like CNBC appearances) or more recently, Twitter, to get attention. But Apple will not be easily swayed by any noise. Its sales are strong, cash and earnings are growing and the stock (which has benefitted from Icahn’s investment and noise to some extent) has increased 40% in the past year. That means Apple’s institutional stockholders won’t be likely to pound on the doors at Cupertino for change.

    In short: don’t worry. This is not an HerbaLife stock fistfight. It’s just Carl being Carl.

  4. “Icahn is deft at using his position to rally other investors to his side.”

    Maybe, but I wouldn’t be surprised if there was significant pushback, from many investors telling him to butt out.

  5. If Carl Icahn wanted to get more money from an investment in Apple, he should have had the foresight, insight, or brilliance to buy Apple shares in Spring 2003, when he could have bought 1 share for < $1 each. Yes, that is less than one dollar per share (split-adjusted equivalent).

    1. Can you not remind me of April 2003???

      🙂

      I remember reading MDN the Friday before Apple opened the iTunes Music Store and seeing how cheap Apple was at the time. Too bad I was too broke to buy any. I should have begged, borrowed, or rang up my credit card cash advances to buy $5000 worth at the time.

  6. Here’s why Carl Icahn wants EVER MORE attention: He’s a rabid narcissist. He gets that attention because he has lots more financial gaming pieces than just about anyone else. IOW: The lost are easily hypnotized by the even more lost. Thankfully, Apple is far from lost.

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