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Old Jan 22, 2014, 09:50 AM   #1
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Carl Icahn's Stake in Apple Passes $3 Billion Amid Continued Stock Buyback Pressure




Activist investor Carl Icahn has just tweeted that his investment firm has acquired an additional $500 million in Apple stock over the past two weeks, pushing his stake to over $3 billion. Calling continued investment in Apple a "no brainer" at current prices, Icahn also continues to believe that Apple needs to significantly increase its stock buyback program. A more in-depth letter from Icahn on the topic will be forthcoming.

Quote:
Having purchased $500 million more $AAPL shares in the last two weeks, our investment has crossed the $3 billion mark yesterday. - Carl Icahn (@Carl_C_Icahn) January 22, 2014
Icahn began buying significant amounts of Apple stock last August, and has been vocal about encouraging Apple to increase its buyback program to help investors. Icahn met with Apple CEO Tim Cook at the end of September, where he pushed for a $150 billion buyback. As Icahn has taken his case to investors, he has scaled back his proposal and is asking shareholders to vote on a $50 billion proposal at next month's shareholders meeting. That proposal would, however, only be advisory, and should it be approved Apple would continue to be free to do as it pleases.

For its part, Apple management has stated that it is continually evaluating its buyback program and that it plans to announce any changes to the program during the first half of this year.

Update: Icahn appeared on CNBC today to shed more light on his Apple position.
Quote:
Icahn: Apple is a culture with a great ecosystem; what bothers me a hell of a lot is that billions of dollars is just sitting there. o $AAPL - CNBC Newsroom (@CNBCnow) January 22, 2014
Quote:
.@Carl_C_Icahn telling @ScottWapnerCNBC: I'm criticizing $AAPL board, not the management. @CNBCFastMoney - Shannan Siemens (@ShannanSiemens) January 22, 2014
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Carl Icahn LIVE on @CNBC: "There's no one on Apple's board that is a finance guy." o $AAPL - CNBC Newsroom (@CNBCnow) January 22, 2014
Quote:
Carl Icahn LIVE on CNBC: I'm actually better off if Apple does nothing. I plan on buying more of Apple's stock. o $AAPL - CNBC (@CNBC) January 22, 2014

Article Link: Carl Icahn's Stake in Apple Passes $3 Billion Amid Continued Stock Buyback Pressure
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Old Jan 22, 2014, 09:54 AM   #2
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Is this guy ever going to give up?
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Old Jan 22, 2014, 09:54 AM   #3
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Old Jan 22, 2014, 09:57 AM   #4
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I actually can't tell if this guy is just a good businessman, or a 'hidden in plain view' criminal...?
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Old Jan 22, 2014, 09:58 AM   #5
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Make those sort of statements and requests when you don't stand to financially gain; when you do you're basically just saying "give me more money because I want it".
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Old Jan 22, 2014, 09:59 AM   #6
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I actually can't tell if this guy is just a good businessman, or a 'hidden in plain view' criminal...?
I would choose the latter
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Old Jan 22, 2014, 10:01 AM   #7
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Investors like this guy are the reason why company's fail. Take a look at his dealings throughout his history, it's disgusting but he always walks away with millions while the workers get ****ed.

Look up the practice known as Greenmail, this guy was a pioneer of the practice and ruined thousands of lives in the process of doing absolutely nothing of value.
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Old Jan 22, 2014, 10:04 AM   #8
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I don't know anything about stocks, but buying 500$ more shares and demanding a buyback from apple just don't work together IMO
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Old Jan 22, 2014, 10:06 AM   #9
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Originally Posted by NT1440 View Post
Investors like this guy are the reason why company's fail. Take a look at his dealings throughout his history, it's disgusting but he always walks away with millions while the workers get ****ed.

Look up the practice known as Greenmail, this guy was a pioneer of the practice and ruined thousands of lives in the process of doing absolutely nothing of value.
Not to mention a little airline called TWA...
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Old Jan 22, 2014, 10:08 AM   #10
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Buy the stock and sthu.
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Old Jan 22, 2014, 10:08 AM   #11
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Not to mention a little airline called TWA...
Exactly! The man is a money hungry monster, but Time calls him the most important investor in the USA (which is true given he could cause great harm all on his own) and the rest of the media kisses his ass like he owns them.....wait a tick.
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Old Jan 22, 2014, 10:09 AM   #12
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Originally Posted by Wuiffi View Post
I don't no anything about stocks, but buying 500$ more shares and demanding a buyback from apple just don't work together IMO
I don't know much about the market either, but I would imagine that if Apple buys back stock then there are less shares available to the public. I would think that would push the price per share up.

Maybe someone will chime in.
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Old Jan 22, 2014, 10:21 AM   #13
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This guy is just a parasite of the system...making money of thin air
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Old Jan 22, 2014, 10:25 AM   #14
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Originally Posted by TheAppleFairy View Post
I don't know much about the market either, but I would imagine that if Apple buys back stock then there are less shares available to the public. I would think that would push the price per share up.

Maybe someone will chime in.
I am no expert either, but I think you are right, buyback means there will be less shares available and hence the value of the shares should shoot up.

The guy has $3 billion now, billion! that means that if say the stock shoots just 10%, he will make $300 million overnight.

Things that make you wonder...
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Old Jan 22, 2014, 10:27 AM   #15
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Originally Posted by TheAppleFairy View Post
I don't know much about the market either, but I would imagine that if Apple buys back stock then there are less shares available to the public. I would think that would push the price per share up.

Maybe someone will chime in.
Don't worry, about 98% of the comments in these threads come from people who don't know a thing about the markets.

When you buy shares in a public company, you are buying a piece of that company's earnings. Buybacks concentrate earnings on fewer shares. If a company with 100M shares earned $100M, the earnings per share (EPS) is $1.00. If they take 50M shares off the market through a buyback, EPS will rise to $2.00. If companies do nothing about the number of shares outstanding, over time the opposite will happen, as they grant shares and stock options to executives. This is called dilution. In part, buybacks are a strategy to reverse dilution.

So just to be clear about a couple of things: First, Apple is under no "pressure" do anything, so the headline of this article is fundamentally misleading. Second, the buyback that Icahn is proposing represents less than the amount of free cash Apple will generate in one year. So even if Apple accepted the proposal, they'd still end up the year with more than the $150B cash hoard that they are sitting on today.

Finally, Icahn is fundamentally correct. When a company generates cash far in excess of their ability to reinvest it in growing the company, then they need to find other ways to benefit stockholders. The two ways are dividends and buybacks. Apple is already doing both, so the only question is whether either or both will be increased. Last I heard from Apple, they were preparing to announcing something this month. It might come next week, at the earnings announcement.
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Old Jan 22, 2014, 10:27 AM   #16
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Originally Posted by Tiger8 View Post
I am no expert either, but I think you are right, buyback means there will be less shares available and hence the value of the shares should shoot up.

The guy has $3 billion now, billion! that means that if say the stock shoots just 10%, he will make $300 million overnight.

Things that make you wonder...
He has a looooong history of forcing companies to do things like this (through his massive shareholder sway) which always ends up hurting the company immensely while he walks away with heaps of money.
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Old Jan 22, 2014, 10:30 AM   #17
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He may own a large dollar amount of the stock, but it's still small compared to the total amount of shares. $3B / $500B market cap = 0.6% ownership.
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Old Jan 22, 2014, 10:31 AM   #18
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Things that make you wonder...
Doesn't make me wonder. He's in it for the money, just as any stockholder ought to be.
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Old Jan 22, 2014, 10:31 AM   #19
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Most people on the forum are hard core apple fans, and don't really have a full education on how the market works. Its very irresponsible for apple to do nothing with their money. Money sitting unused is profit lost. And you have to remember that shareholdes OWN apple, they aren't just a bunch of crooks trying to leech. They were there to make apple rich when they sold off shares at the IPO, floated apple in the 90s when they needed to raise cash, and now Icahn wants apple to do something with that cash - buy some companies, give it to shareholders -SOMETHING. He specifically wants apple to buy back more of itself, which both increases the share price and gives Apple more control moving forward.

And I do too. Its what a good company needs to do.

They've got over 120 BILLION dollars doing NOTHING.

I don't love Icahn and I really do wish he'd leave apple alone - but let's stop badgering him like he wants to dismantle the company.

Last edited by spyguy10709; Jan 22, 2014 at 10:38 AM. Reason: clarity. sorry I'm on my phone.
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Old Jan 22, 2014, 10:32 AM   #20
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In case you're not familiar with Icahn (and since he's continued to make appearances here) you should check out the 60 minutes story on him: http://www.youtube.com/watch?v=wZjms7rRAQw
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Old Jan 22, 2014, 10:34 AM   #21
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Why is there so much negativity here on this board? I applaud every time when he buys Apple shares. Apple is not one of the smaller companies that he could manipulate. Even if he had $5b invested in Apple, it's still just 1%.

Apple will be just fine, regardless if the managements choose to buyback more shares or not. Just relax. He won't be able to 'destroy' Apple even if he tries to.
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Old Jan 22, 2014, 10:37 AM   #22
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Originally Posted by IJ Reilly View Post
Don't worry, about 98% of the comments in these threads come from people who don't know a thing about the markets.

When you buy shares in a public company, you are buying a piece of that company's earnings. Buybacks concentrate earnings on fewer shares. If a company with 100M shares earned $100M, the earnings per share (EPS) is $1.00. If they take 50M share off the market through a buyback, EPS will rise to $2.00. If companies do nothing about the number of shares outstanding, over time the opposite will happen, as they grant shares and stock options to executives. This is called dilution. In part, buybacks are a strategy to reverse dilution.

So just to be clear about a couple of things: First, Apple is under no "pressure" do anything, so the headline of this article is fundamentally misleading. Second, the buyback that Icahn is proposing represents less than the amount of free cash Apple will generate in one year. So even if Apple accepted the proposal, they'd still end up the year with more than the $150B cash hoard that they are sitting on today.

Finally, Icahn is fundamentally correct. When a company generates cash far in excess of their ability to reinvest it in growing the company, then they need to find other ways to benefit stockholders. The two ways are dividends and buybacks. Apple is already doing both, so the only question is whether either or both will be increased. Last I heard from Apple, they were preparing to announcing something this month. It might come next week, at the earnings announcement.
I am not knowledgeable on this subject at all. But when he walks away, and I am only assuming he is going to do that at some point in time when he feels that he has made his slice of the pie, will he not significantly hurt those stock prices? Or is he just opening Apple's eyes to what they could be doing a bit better with their cash stockpile?
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Old Jan 22, 2014, 10:37 AM   #23
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Originally Posted by spyguy10709 View Post
Most people on the forum are hard core apple fans, and don't really have a full education on how the market works. Its very irresponsible for apple to do nothing with their money. Money sitting unused is profit lost. And you have to remember that shareholdes own apple, they aren't just a bunch of crooks. Icahn wants apple to do something with that cash - buy some companies, give it to shareholders -SOMETHING. They've got over 120 BILLION dollars doing NOTHING.

And I do too. Its what a good company needs to do.

I don't love Icahn and I really do wish he'd leave apple alone - but let's stop badgering him like he wants to dismantle the company.
Agree entirely, but a correction: over $150B.
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Old Jan 22, 2014, 10:40 AM   #24
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I don't know much about the market either, but I would imagine that if Apple buys back stock then there are less shares available to the public. I would think that would push the price per share up.

Maybe someone will chime in.
If Apple buys back shares and retires them then theoretically, the value of the stock should rise. Of course the market is strange in this regard sometimes. The "market capitalization" (market cap) of the company is the number of shares multiplied by the price per share. The market cap is the theoretically value of the company if you were going to put a price tag on it. However, if one were to try to buy a company for the market cap then those share purchases would drive the price up -- similar to how real estate values drive up when a company tries to buy a lot of land in one area. This is why Disney used shell companies to buy up land in Florida to keep anyone from knowing that they wanted all the land in an area to build Disney World. However, with the stock market you cannot secretly buy shares after a certain point -- you have to publicly declare how many you own.

That said, if the market cap is the value of the company in the public's eye, then if you reduce the number of available outstanding shares then the share price should go up to compensate. The problem is that investors put strange emotional or mental barriers on share prices. It seems the $100 and $10 hurdles are where stocks often meet resistance. It doesn't seem to matter how many shares get bought back at times when you are up against a barrier based on public perception.

For example, if AAPL hit $700 again it would do so with about 50M less shares than last time. Regardless, the market would react with a huge sell-off near or at $700 when it came because people would view it as an "all time high" valuation for the company, when in fact the all-time high for market cap would translate into a share price closer to the $740 given the current share count.

Icahn's has two big motivations for a buy-back:
1) He thinks it will drive up the price of his shares -- which it likely will.

2) Given the price of AAPL, it is the only way he can gain significant voting strength at shareholder meetings. The more shares that Apple retires, the greater percentage of the company Icahn owns and therefore he gets more say when he votes with his shares.

I think #2 is his bigger motivator. He doesn't have enough money to get a significant voice in Apple share holder meetings like he has done in the past with Dell or TWA. BUT, if he can get Apple to use its own cash to buy back shares then they are increasing his percentage share of the company's total stock and therefore his ability to influence the board by voting his shares.
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Old Jan 22, 2014, 10:42 AM   #25
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I am not knowledgeable on this subject at all. But when he walks away, and I am only assuming he is going to do that at some point in time when he feels that he has made his slice of the pie, will he not significantly hurt those stock prices? Or is he just opening Apple's eyes to what they could be doing a bit better with their cash stockpile?
Neither, or both. Nobody holds stock forever. They buy with the expectation that some day they will cash out, though not necessarily all at once. Icahn isn't telling Apple anything that they don't know already. The cash hoard is dead money.
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