icahn_great_and_powerful1

Photo illustration: John Paczkowski / Metro-Goldwyn-Mayer

General


Carl Icahn continues to build his position in Apple, raising it to more than $3 billion, the gadfly investor said Wednesday.

In a series of tweets, Icahn said he’s been amassing Apple shares since first announcing his position in the company back in August. He claims to have purchased more than $500 million in the last two weeks alone, pushing his stake — which was worth nearly $1.9 billion as of Sept. 30, 2013 — beyond the $3 billion mark (Note: that’s still less than 1 percent of Apple’s shares). Growing in concert along with Icahn’s Apple stake is the billionaire’s sense of indignation over Apple’s refusal to accede to his demands to increase the size of its stock buyback program.

Apple’s board of directors “is doing great disservice to shareholders by not having markedly increased its buyback,” Icahn tweeted.

Apple declined comment on Icahn’s tweets, referring Re/code to its latest proxy statement in which it recommends voting against Icahn’s advisory proposal asking it to increase the size of its stock buyback program in 2014 to $50 billion. Apple’s position: It already increased the size of its dividend and stock buyback program to $100 billion in 2013, and is thoughtfully considering options for returning additional cash to shareholders.

“In March 2012, the company announced a quarterly dividend and share repurchase program totaling $45 billion,” Apple said in its proxy. “In April 2013, the board authorized a dramatic increase, more than doubling the size of the program to $100 billion, raising the dividend, and increasing the share buyback authorization to $60 billion. As such, the company is one of the largest dividend payers in the world and has the largest share repurchase authorization in history. The company has executed aggressively against the capital return program, spending $23 billion of the $60-billion share repurchase authorization in fiscal 2013 alone.”

At $555.10, Apple shares are up a little over 1 percent today.




8 comments
Hungry4knwldge
Hungry4knwldge

Can someone explain how a shareholder who has less than a 1% stake in a company can make demands on its board of directors?

RuiCarneiro
RuiCarneiro

Can someone explain me this, like I'm 10?


I'm interested in this subject, but I don't understand the economy behind it.


Thanks

KenG
KenG

Apple doesn't have to expand their buyback program, Icahn is buying shares from the market for them.


As an Apple shareholder, I'm glad Cook is ignoring him. 


BayportBob
BayportBob

@Hungry4knwldge Icahn or any other stock holder can make demands.  There are people that own one share of a company just to be able to attend stock holder meetings and make an attempt to get their agenda heard.  Icachn is also well known and is always a good story for reporters.  The guy is just a person wanting to work the system to make a fast buck.  How much money does one need and how much of it is just ego and looking to extend his 15 minutes of fame for another period of time?

KenG
KenG

@RuiCarneiro Rui, Apple has over $150 billion in cash, and not enough things to spend it on.  Parasites, I mean, people, like Icahn want Apple to buy shares back from the market, because they believe that will drive the share price up, since there will be less shares available for trading every day. If, on a given day, stock traders want to buy 1 billion shares of Apple stock, and sellers only want to sell 900 million shares, the price will have to go up to convince more people to sell their Apple shares.  That's the theory, anyway, and that's what Icahn wants - the price of Apple stock to go up, so he can sell his shares and make a lot of money.  He doesn't care what will happen to Apple after he sells his shares, because he will already have made a huge profit and will no longer own Apple shares.


Apple is already buying shares back, but Icahn wants them to use even more of their money.  Apple management thinks that is risky, because if there is a drop in profit (that could happen, especially since there aren't many good reasons to upgrade the iphone 5 or 4s, let alone the 5s), they will have less cash to spend on inventing new things that people feel they can't live without.  So Apple is basically ignoring Icahn, because they don't care if he makes money trading their shares, they want to make money by selling things that people want to buy.


People (and I use that word loosely) like Icahn make their money by buying shares of company that they think are undervalued, and then convincing other people that those shares are undervalued, so the price will go up.  If their word is not enough to drive the price up, they resort to tricks like pressuring management to do things that only benefit the short-term stock price, even if it harms the company in the long term. Fortunately, Tim Cook doesn't have to worry about Icahn getting him fired, so he doesn't have to cave in to that pressure.

RuiCarneiro
RuiCarneiro

@KenG @RuiCarneiro And what if he sells short all his stock ($3B)? Price will go down how much %? Considering that apple's $497.22B, how can it affect? 0,6%?

RuiCarneiro
RuiCarneiro

@KenG @RuiCarneiro Thank you very much! :)


And... why, Apple being in it's position doesn't buy/makes contracts more corporations (and I don't mean small fish like start-ups), but corporations than are today ineffective in the market, but have a good team of operatives?


I can think of two that could be wonderful for Apple and are in difficult economic situation.

KenG
KenG

@RuiCarneiro I expect that he will eventually give up and sell his shares, but I don't know if he will short them at the same time, as that would cause him to get even a lower price for his shares. However, the price drop caused by his exit will be temporary, and will not really harm the stock for those who focus on the longer term.

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