Published On: Thu, Jan 23rd, 2014

Carl Icahn Increases Apple Holding To $3 Billion And Tweets It To The World


Activist investor Carl Icahn is on a roll these days. Shares in Icahn Enterprises doubled in 2013 and his investment fund made a 31% return.

An astute activist investor Icahn is also a good stock picker, period. As a master of public relations he has also even found a way to simply combine the two to good effect. Now when he takes a position in a company, he tweets it to the world and brings a lot of attention to what he is up to. This certainly doesn’t hurt the stock of the companies he invests in at all. When lesser folk do it it is called “talking your book”, when he does it people may well try to emulate him.

During 2013 he took a big position in Apple shares last summer, when there was a lot of negative sentiment surrounding the company, despite having excellent results, good prospects and oodles of cash sitting in its balance sheet. The company is aready paying a good dividend and has a programme to buy back shares too, all staples of the activist corporate play book.

Nominally, Icahn is demanding much greater share buy-backs and has even put a resolution to the forthcoming Apple Annual Shareholders Meeting, asking though not insisting for this, which takes place on February 28th, 2014.

2nd Annual "David Moore's Funny Business Show"
Carl Icahn / Getty

After he bought in to Apple during 2013 its shares rose considerably, so his original US$2 billion investment has already paid off for him. We learned this week that he has now increased his holding to over US$3 billion. Here are his tweets on the subject announcing it yesterday:

10.50 am: Since tweeting about our large position in $AAPL on Aug 13, when the stock was 468 per share, we’ve kept buying shares of this ‘no brainer.’

10.50 am: Having purchased $500 million more $AAPL shares in the last two weeks, our investment has crossed the $3 billion mark yesterday

10.51 am: We feel $AAPL board is doing great disservice to shareholders by not having markedly increased its buyback. In-depth letter to follow soon.

Icahn has also specifically said he thinks Apple management is doing a great job and his beef is just with the board for not agreeing with him on share buy backs.

In the pre-Twitter age it would have been very difficult to get so much attention with so little effort expended. Apple’s shares rose in response too, and now stand at US$551 per share before today’s opening bell.

Even with a US$3 billion position in the company Icahn’s Apple holding is only just over half of one percent of the company’s enormous market capitalization, and his resolution for more stock buy-backs is unlikely to prevail at the Annual meeting. Many blue chip pension funds are long time holders of Apple shares, some since it started more than 25 years ago. Giant California pension fund Calpers, for one, has even criticized Icahn as a “Johnnie come lately” whose advice was not really needed. CEO Tim Cook has clearly learned the importance of maintaining good communications with his shareholder constituencies, after a rocky first year in office to be sure.

As an astute stock trader Icahn likely couldn’t care less, however, and he has carefully timed his latest verbal assault just a few days before Apple reports, on January 27th, its financial results for what many people believe may well have been an enormously success Christmas holiday quarter for the company. If indeed it was, then the shares could respond even further if current expectations should have to date only factored in a more measured result.

Carl Icahn has also said more than once that the Apple Board itself lacks aprpriate membership from the financial community. He has not gone as far as to bring himself to ask for a seat for himself, but I bet he would love to be invited into the tent. Heck it may even be quite a good idea too.

 

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