Peak Apple? HOGWASH! Apple is 'extremely undervalued,' says Icahn
Billionaire has already snapped up a $1bn stake
Ever one to keep multiple irons in the fire,
corporate raider activist investor Carl Icahn has announced via Twitter that he has taken a major position in Apple, a stock he says he considers "extremely undervalued."
Bloomberg reports that the billionaire's share of the fruity firm amounts to more than $1bn, which sources claim he has amassed in just the last month.
Apple stock is currently trading at around $490 per share – the highest it's been since January – but Icahn said he believed it could go up even further, to around $600.
To help facilitate that, Icahn said he believed Apple should expand the share buyback program it announced in April and that it should start returning money to shareholders immediately.
Shortly after announcing his stake in the firm, Icahn tweeted that he had already had a discussion with Apple CEO Tim Cook about the idea – which Apple later confirmed – and, somewhat ominously, that he had every intention of continuing those talks.
Had a nice conversation with Tim Cook today. Discussed my opinion that a larger buyback should be done now. We plan to speak again shortly.— Carl Icahn (@Carl_C_Icahn) August 13, 2013
The move is a typical one for Icahn, who specializes in snatching up stakes in companies that have fallen out of favor and then pressuring their executives to turn on the cash faucets.
Most recently, he has been embroiled in a battle with Michael Dell over control of his namesake computer maker. Big Mike has floated a $24.9bn leveraged buyout plan that would see Dell go private, while Icahn would prefer to keep the company public and do a leveraged recapitalization that would include – naturally – paying shareholders a "significant" one-time dividend.
While it's in nowhere near as bad shape as Dell, Apple's shares have been sliding into the doldrums since the death of its adulated cofounder, Steve Jobs. Its stock price has shed around 22 per cent in the past year.
Investors worry that without Jobs as the driving force behind Apple, it could slip back into a fallow period like it did from 1986 to 1997, when Jobs was in exile. The company is widely expected to announce a new iPhone (or two) on September 10, but most rumors predict few radical changes from the last round, and critics including Oracle's Larry Ellison wonder whether Apple still has the creative spark to deliver another big market win.
But where fanbois see grey clouds ahead, Carl Icahn sees opportunity. Though $1bn is, admittedly, a lotta dough, that sum gives him less than a 1 per cent share of the company, which currently has a market capitalization of $444.8bn. Yet just the mere fact that it's Icahn who bought the shares is enough to make waves on Wall Street, which saw Apple's stock price shoot up 4.8 per cent on the news. ®