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Investor Carl Icahn to Have Dinner With Tim Cook, 'Magnitude' of Share Buyback to Be Discussed
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So you're saying it has nothing to do with supply and demand, since price is affected because EPS is raised by... reducing the share supply. Okey doke.
I just figured it would be easier to explain using concepts that most people are already familiar with.
One would hope. But in that case, I'd think he wouldn't need to have dinner with Icahn to discuss this topic in the first place.
I said long term and for the company. Is Dell as a company doing better or worse since he got involved.
I'm not against making a profit, but manipulating the price as this guy has is something I don't like. You can either destroy the market price Apple has or make one.
Depending on your goal you can deal a hard blow on anyone using the stock market. Lets assume that Icahn would have stated that Apple is overvalued... market reacts to one phrase and bam.
That's what I'm against. Price manipulation and this dude has done it so seemingly simple people aren't noticing or refuse to take notice.
No one is asking for insider information and Tim Cook certainly isn't gong to give any insider information.
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A lot of seemingly simple people certainly have noticed something. The problem is, they're wrong.
The shareholders will get a much better deal because of Icahn's involvement. You know, you could inform yourself of these things before making broad accusations.
That isn't exactly what I was saying. Sure you can invent a supply and demand model for the stock market but it's an unconventional one, since the supply of stock is essentially fixed. More current stockholders will be induced to sell if the price goes up, but companies don't make more stock to satisfy an increased demand. Nor do they buy back shares for the purpose of constraining supply; they do it to concentrate earnings. The factors that cause investors to be buyers and sellers is what they forecast for future earnings per share, so this is why investors like stock buybacks.
Everybody's got to eat. I would love to be a fly on the wall for that discussion, but I have a feeling they will be dining in a restaurant totally lacking in flies.
You really don't understand what those sites were saying. You don't have the foggiest idea. When you're deep in a hole, stop digging.
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For several reasons, that statement reflects far worse on you than it does on Icahn.
Share buyback - signals to the market that the company subscribes to the notion that the shares are undervalued. The market will adjust accordingly - who knows better about the company than the company itself? And if they're confident enough about it to let their own money speak..
In the shorter term, there will be some premium on the share repurchase price too, causing share prices to bump.
You'd be surprised to know the last time things went the way investors like, we get stuff like the 2008 market crash. Too much fake money in the market.
Because you don't know what you're talking about and haven't taken the time to educate yourself on these issues before spouting your opinion.
Irrelevant to this discussion.
It's not exactly what you were saying, but it's a perfectly valid way to look at it. No need for anyone to strain themselves inventing an unconventional model; it's still the same undergrad micro 101 model as for any other liquid asset. You've got a downward-sloping demand curve (which accounts for EPS) and an upward-sloping supply curve (in this case, vertical), with a buyback shifting the supply curve left.
I've no problem with stock buybacks as a concept, but I'm not entirely sure I trust Carl Icahn to have long-term Apple investors' interests in mind.
You are dodging the question. I asked if Dell the company was in better shape after Icahn (not the shareholders). The shareholders will get a better deal in the short run but what was his affect on the company Dell (i.e. accelerating it towards oblivion) ?
As an Apple user I care about long term prosperity of the platform, not short term gains for shareholders or the thickness of Icahn's wallet if it happens to be a conflicting goal.
It might be valid if it wasn't being used to describe the effect of buying back shares, since the available supply of shares at any given moment is dependent on the willingness of sellers to sell, not the total number of shares owned. I think it's useful to keep the ultimate purpose of buybacks clear.
I don't trust Icahn any more or any less than any other large investor. Icahn draws a lot of attention, party because he craves it, but so many other investors (institutions, mainly) hold larger pieces of the company and therefore more influence. Not that you ever hear about them.
It's true, you could say that the ultimate purpose of buybacks is to increase the ratio of the net present value of the company's current assets and future earnings to available shares (though the total number of shares still matters in determining the earnings per share, which affects price, which affects willingness to sell)... but I thought it would be more accessible to explain it by saying the supply curve moves left.
Unbelievable. Dell is going private! Icahn got the current owners of the company (the shareholders) a much better deal by exposing a deficient offer and campaigning for a better one.
Apple is a business and it is their job to increase the value of that business. If Icahn's proposal increases the value of Apple then it's good. It's "funny" how the discussion on this forum never actually talks about whether the proposed capital structure changes will be better for the shareholders, but usually centers around the irrelevant ramblings of Apple apologists and non sequiturs.
Because you don't understand the situation.
He bought Apple stock. He is a large shareholder. He is required to disclose his position. He did. He has ideas for how to increase the value of his stock (which is the same as everyone else's). He is going to tell Tim Cook his ideas. Tim Cook (as well as the management of all publicly-held companies) has frequent conversations with large and/or influential shareholders. Tim Cook can either agree or disagree with his ideas. End scene.
Easy enough for everyone?
bought a bunch of stock and now wants to get richer by selling them, how does this make him a activist investor.
Increased value is a side effect of what they are doing, it's not a goal in itself. I commented because of you treating it as such, it's not like gravity you know. Apple generates profit and has a value because it creates compelling products that people want to buy, it's not irrelevant, it's the core of what they are doing.
You need to go back to Business and Econ 101....
The "Supply" is the amount of shares of the company. Establishing value can be done however you want (EPS, Earnings, assets, whatever). But the fact remains that that supply is fixed.
Think of it this way - I have a car. That car is worth $100 and I want to share ownership. The value of it is $100. I can sell 2 "shares" @ $50, 4 @ $25, etc. But the fact is there will only be that amount of shares. Now say my car is a Ferrari and people want in on it. That will raise the value of those shares. Should I want to make more $, I can release more shares either through an offering or a split. if I do a 2:1 split, you now have double the shares at half the cost. If I want to reign in the shares, I'll buy them back, increasing the cost as those shares are less easily obtained and therefore more valuable.
It's the reason why stock buybacks raise share prices and splits lower prices.
Now sure, the MBA's will blow smoke up your a$$ but that is the basic fact. Supply of stock is fixed and we all are trading on that fixed pool of stock. Sure there may be a seller for every buyer but that doesn't have to be the case.
And don't try to put any reason into the stock market. There is none - it's basically legalized gambling. You have "analysts" giving opinions on companies with little basis in fact and have wide swings based on tiny numbers.
You have to look no further than Amazon for this - the company barely makes a profit and yet their stock price is high. They have a very capital heavy business (Building warehouses), trying to keep prices low. But at any moment (if a CEO had a set of cajones) they could be out of business. How? One of the B&M companies could turn their stores (warehouses) into distribution centers, deliver your stuff to you the same day, undercut Amazon, and still operate a retail operation. Think Service Merchandise on steroids. Heck, if WalMart or Target got serious they could kill Amazon tomorrow.