Billionaire activist investor Carl Icahn bets on Apple, talks up stock
Activist investor pushes the iPhone maker for a buy-back after saying he has built a huge stake in the company, sparking a rally in the share price
Activist investor Carl Icahn said he has amassed a “large position” in Apple and believes the stock could be worth as much as US$700 a share if chief executive Tim Cook pushed for a larger stock buyback.
The surprise revelation from the billionaire activist caused a stir on Wall Street and pushed Apple’s stock almost 5 per cent higher to close at a 7-month high of US$489.57 on the Nasdaq on Tuesday.
Icahn said on Twitter that he had a “nice conversation” with Cook and they planned to speak again soon. Apple confirmed the conversation took place, but did not say if it influenced management’s view of buybacks.
We have a large position in Apple. [The firm is] extremely undervalued
Icahn told Reuters that the iPhone, iPad and Mac computer maker has the ability to do a US$150 billion buyback now by borrowing funds at 3 per cent.
“If Apple does this now and earnings increase at only 10 per cent, the stock - even keeping the same multiple currently - should trade at US$700 a share,” Icahn said in a phone interview. Apple has “huge borrowing power, little relative debt and trades at a low multiple.”
Icahn, who this year launched an assault on Michael Dell’s US$25 billion effort to take Dell Inc private, did not say how many shares of Apple he holds.
