Carl Icahn Buys $500 Million More in Apple Shares Following Earnings Dip

[ArtOfWarfare]

Since he bought those shares from investors who sold, no, him buying AAPL does not give Apple any cash. That's only when Apple is selling shares.

His purchasing of shares from other investors increases the value of shares of Apple, no? Therefore, Apple has more money, in the form of the shares they own of themselves.

I may be mistaken - I took an introductory class to business finances and I have no actual experience, but that's my understanding of how the stock market works.

 

[SoAnyway]

Sounds exactly like a pump and dump. He is betting that he can make enough noise to force Apple to pump the market with a buy back so he can then dump his stake and make hundreds of millions of profit. People like him couldn't care less what happens as long as they dump their stock before any trouble they cause starts and leave all the remaining investors like pension funds etc. to pick up the pieces.

So the strategy of him causing other investors to lose money makes him a "legendary" investor? Just something to think about.....

 

[SusanK]

What's good for stockholders and what's good for customers are not always the same thing.

I want Apple to be a company that keeps on bringing out new toys for me to play with. I don't really care how well that works out for its stockholders, as long as the company does well enough to do what I want.

Have you considered taking it private?

 

[cameronjpu]

His purchasing of shares from other investors increases the value of shares of Apple, no? Therefore, Apple has more money, in the form of the shares they own of themselves.

I may be mistaken - I took an introductory class to business finances and I have no actual experience, but that's my understanding of how the stock market works.

You should probably take a few more courses before more comments And ignore everything said in this thread. Since about 10% of it reflects the way the world works and 90% reflects fanboi anger, anti semitism and just general ignorance, it's going to make you dumber to read it.

At least, unlike most posters on this thread, you admit up front that what you are about to say is most likely wrong.

 

[everything-i]

To be fair, don't his comments make perfectly transparent that's what he's doing? It's not like he's either pushing for this buy back or investing in secret.

Problem is he makes out that Apples board are the one in the wrong. They are hurting stock value holding onto cash which is stopping him making huge short term profits on his stock purchase. Truth is he just wants Apple to blow all its cash on a buyback so he can dump his stake and the price will likely end up no more valuable in the long run. In fact in the long term it may end up hurting Apple, but he dresses this up as if he is some kind of injured party. He glosses over the fact that to buy back shares Apple will either need to bring cash back to the US costing them a fortune in tax or they have to borrow the money leaving them with high levels of debt. If he was such an activist, as he like to paint himself, he would be lobbying the US government to stop the practice of taxing money that has already been taxed abroad when it is repatriated.

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So the strategy of him causing other investors to lose money makes him a "legendary" investor? Just something to think about.....

In the eyes of Wall Street yes it does, but to everyone in the real world who's pension funds and savings are harmed or their jobs are lost by the selfish actions of characters like this he is an absolute horror of a human being.

 

[NewbieCanada]

Have you considered taking it private?

After I take it private I'm tripling the prices and only selling to people I like.

PRSI posting history will be taken into account.

 

[EmpyreanUK]

In the eyes of Wall Street yes it does, but to everyone in the real world who's pension funds and savings are harmed or their jobs are lost by the selfish actions of characters like this he is an absolute horror of a human being.

But as you said, his aforementioned pressuring of Apple to repatriate its cash holdings would generate massive tax revenues for the US government, some of which would go towards... pensions.

 

[69650]

I so hope he gets burned on this investment and loses a lot of money.

 

[Reason077]

Care to share your wisdom as to why? His track record in the stock market wouldn't exactly support your prediction.

He already lost around 0.25 billion dollars yesterday - something will need to change significantly in order to make that back any time soon.

He's taking a gamble on convincing Apple to hugely step up their buyback programme. Admittedly they can afford to do so, but will they? I don't see it happening until the stock goes significantly lower than where it's at today.

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Carl sees value at AAPL, specially at this price. While the rest of Wall Street think APPL is too expensive and heading down.

Economic conditions are working against the market in general. With the Fed tapering the QE program, there's less cheap money floating around to buy stocks with, so we're due for a correction at some point - regardless of whether AAPL is good value compared to other stocks.

 

[Reason077]

His purchasing of shares from other investors increases the value of shares of Apple, no? Therefore, Apple has more money, in the form of the shares they own of themselves.

Not really.

An increase in Apple's stock price increases it's market capitalization, but that doesn't translate into extra cash in their bank account.

That's because companies don't generally trade in their own stocks - aside from in things like IPOs and buy-back programmes. When a company buys back its own stock, those shares are typically cancelled and can't be sold again.

Stock offerings (i.e. creating new stock and selling them) are usually only done by startups and early-stage growth companies. Mature companies tend to issue bonds rather than new stock if they need to raise capital at some point.

 

[SusanK]

After I take it private I'm tripling the prices and only selling to people I like.

PRSI posting history will be taken into account.

As soon as you are sole owner you can do that

 

[osx11]

Even if he is right and Apple should follow through with this recommendations, it is kind of cool to see a millionaire who isn't getting everything his way.

Money can't buy you everything.

Just makes me smile inside.

 

[giantfan1224]

He already lost around 0.25 billion dollars yesterday - something will need to change significantly in order to make that back any time soon.

Yeah, he lost over 8% in his AAPL position, just like the rest of us did. And he upped his position by another $500 million yesterday. As far as "something will need to change significantly" you obviously haven't followed the stock price over the last few months. Or any stock price.

He's taking a gamble on convincing Apple to hugely step up their buyback programme. Admittedly they can afford to do so, but will they? I don't see it happening until the stock goes significantly lower than where it's at today.

He's taking a gamble on buying the stock at all. We all take a gamble when we invest in the market. The point you're missing is this guy has proven he's pretty good at the stock market. Love him, hate him, despise him, believe him to be the scum of the earth, he didn't become worth some 20 billion by making a bunch of stupid investments.

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I so hope he gets burned on this investment and loses a lot of money.

That's a pretty selfish thing to hope for, considering all the people invested in AAPL in one form or another. Not to mention the people that work for Apple.

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Even if he is right and Apple should follow through with this recommendations, it is kind of cool to see a millionaire who isn't getting everything his way.

Billionaire.

 

[Rodster]

That guy is the Darth Vader of corporate business. He damaged the Airline industry back in the 80's with his buying and selling off pieces of the business. That's what has made him wealthy over the years. IIRC, Richard Gere's character in Pretty Woman was loosely based on Ichan.

 

[SusanK]

IIRC, Richard Gere's character in Pretty Woman was loosely based on Ichan.

Easy on the eye and he did redeem himself.

 

[unplugme71]

Sure they do. They get to use the money he has invested in them. If they didn't want investor money, they'd be privately traded instead of publicly traded.

You do realize Apple only gets the investment money on the IPO or release of additional stock. Trading stock post-IPO does not earn them money at all.

 

[everything-i]

But as you said, his aforementioned pressuring of Apple to repatriate its cash holdings would generate massive tax revenues for the US government, some of which would go towards... pensions.

No, that money would just get swallowed up by the Government machine and spent on propping up an essentially debt driven economy with arms purchases and such, basically what they would get would be a lot of cash as a lump sum that would still be a drop in the ocean of annual expenditure. Only government pensions could see any of it but that's doubtful, private pensions relied on by most individuals are the ones hurt by stock market pump and dump schemes like this. In the end Apple would almost certainly end up in a worse place being either cash poor or heavily indebted and Icahn and his cronies will be laughing all the way to the bank. All it takes is for Apple to have a couple of failed product launches and their value will plummet, if they have no reserves or large debts it will put them in a very bad place.

 

[NewbieCanada]

Easy on the eye and he did redeem himself.

Both of those are why it was only LOOSELY based on Icahn.

 

[vartanarsen]

What sense does it make to buy AAPL when its bloated....the smart people are the ones who bought it when it was $26. Anybody with money can buy it now--thats not what necessarily makes you smart

 

[melendezest]

Articles like this make me think of how different I am to rich people.

He is reeally rich, and reeally old. What does he do with that much money (his profits, I mean)?

You can't take it with you...what's the point of having so.much.bloody.money?

I will never, ever, understand them (that is, wealthy people). At some point, I would stop trying to keep more and just spread it around to make things better for more people.

No handouts, but actual help. I guess I have a little bit of Forrest Gump in me..

 

[cameronjpu]

Articles like this make me think of how different I am to rich people.

He is reeally rich, and reeally old. What does he do with that much money (his profits, I mean)?

You can't take it with you...what's the point of having so.much.bloody.money?

I will never, ever, understand them (that is, wealthy people). At some point, I would stop trying to keep more and just spread it around to make things better for more people.

No handouts, but actual help. I guess I have a little bit of Forrest Gump in me..

You might think about it a little deeper. Capitalism, self-interest and profit seeking have pulled more people out of poverty in the last 100 years than the entire remainder of human history before capitalism took hold.

Giving it all away is often the worst thing that can happen to the money, and to the recipients. Look up what happens to local farmers in Africa as a result of the USA's "generous" food aid. Giving it away is much harder to do right than just doing what each person does best. Bill Gates did much more good for the world as CEO than he has blowing it all on mostly wasted investments that often hurt the world. He has gotten better recently, though, and that's to be expected. Practice makes perfect.

 

[Jedi Master]

I wonder how he made on his Dell blunder

I'm not sure why he's picking on a high cap target, when there many smaller prime targets.

Yes Apple has lots of cash I think they should bring home but, with taxes the way they are not likely.


Since all the big boys do the same, maybe the gov boys should rethink the mess they have created. As it's shaping up the big money going forward not in the USA, it's China and the emerging economies. So it won't be coming home anytime some.

Shame really, first off shoring jobs then the money. Pretty slick really, silly governments money is for the rich.

Only question is when the gmen figured this mess out. Day or two late, and billions short, shame on them.

Since Carl couldn't push Dell around this is going nowhere, but would love to know how he made out with Dell. Which Mike bought for a song and burned the investors. Just check out how much they spent on acquisitions before going private.

 

[EmpyreanUK]

No, that money would just get swallowed up by the Government machine and spent on propping up an essentially debt driven economy with arms purchases and such, basically what they would get would be a lot of cash as a lump sum that would still be a drop in the ocean of annual expenditure. Only government pensions could see any of it but that's doubtful, private pensions relied on by most individuals are the ones hurt by stock market pump and dump schemes like this. In the end Apple would almost certainly end up in a worse place being either cash poor or heavily indebted and Icahn and his cronies will be laughing all the way to the bank. All it takes is for Apple to have a couple of failed product launches and their value will plummet, if they have no reserves or large debts it will put them in a very bad place.

I was being half-facetious with my original comment, but thank you for a helpful reply and a thoughtful analysis of how Apple's stock position — which to me, always seems pretty abstract with a firm like Apple —*could affect its prospects in the future.

I would argue, however, against the moral slant taken by many in this thread. While I don't doubt the mechanics and ultimate effects of what you've described, there simply isn't an ethical dimension to the stock market, and as such I don't think it's useful to denounce individual players, like Carl Icahn, when it's the rule book, or even the game itself, that predicates this kind of behaviour. It's the nature of the beast.

I don't doubt that Tim Cook and friends are completely aware of this, and I would hope that his acquiescence to lunch with Mr Icahn, apparently in order for the latter to lobby for an intensified Apple share buy-back, was merely a lip-service. As hard as it is to believe that Mr Icahn's objective and strategy are actually as transparently obvious as we all believe in this thread, it doesn't appear that there could be any other motive behind pestering Apple into a stock-buyback beyond furnishing his bottom line.

Were Carl Icahn able to persuade enough of his fellow Apple shareholders of his argument, that a majority voting block could essentially force Apple into an increased buy-back? And what, if any, would the benefit be to Apple? Again, I'm really talking from ignorance here, but is it possible that, but thinking about this is really helping me realise the possible gap between the interests of a company and the interests of the shareholders (whose fates I have naively thought to be bound to one-another), and the fact that, within the stock of one company, there can be very different classes of shareholders.

 

[melendezest]

You might think about it a little deeper. Capitalism, self-interest and profit seeking have pulled more people out of poverty in the last 100 years than the entire remainder of human history before capitalism took hold.

Giving it all away is often the worst thing that can happen to the money, and to the recipients. Look up what happens to local farmers in Africa as a result of the USA's "generous" food aid. Giving it away is much harder to do right than just doing what each person does best. Bill Gates did much more good for the world as CEO than he has blowing it all on mostly wasted investments that often hurt the world. He has gotten better recently, though, and that's to be expected. Practice makes perfect.

Of all the ideologies, I also feel capitalism and profit seeking have been effective. But there are limits. Capitalism and profit seeking is also responsible for the destruction of our environment, the shameful industry called slavery, and the obliteration of entire peoples and cultures in the interest of money.

I believe that there should be righteous purpose behind capitalism. A man like Steve Jobs was riiich, but his work was not solely making money; he improved people's lives with his work. The money enabled him to continue to do it. To put his "dent in the universe."

I don't advocate handouts, as I mentioned. I am for using money to improve people's lives. Don't hand out money, finance training and education, build infrastructure, provide food (at least temporarily) to the desperate, advance technology (such as renewable energy), etc. While some philanthropy is misguided in it's execution, the idea to use personal wealth to attempt to improve other people's lives is above reproach. Just do something other than make money, or at least have people do something meaningful with it for you.

In other words, making money just to have more is pointless. At some point, you should be able to say "this is enough, let's see what I can do with the rest of it to make this world better." Kindness is never, ever wrong. And the wealthy have the opportunity to be the kindest of all, since they can afford to be.