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Carl Icahn Discloses 'Large Position' in Apple, Believes Company is 'Extremely Undervalued'

IcahnLegendary investor Carl Icahn disclosed on Twitter today that his holding company has taken a 'large position' in Apple, believing that the company is 'extremely undervalued' and should increase its share buyback program.

This is similar to the advice that Warren Buffett gave earlier this year, though Buffett did not take a position in Apple.

Icahn disclosed his position on Twitter after yesterday warning investors that he may disclose material information on that account in accordance with new SEC guidelines on social media use.
We currently have a large position in APPLE. We believe the company to be extremely undervalued. Spoke to Tim Cook today. More to come. - 12:21 PM - 13 Aug 13

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. - 12:25 PM - 13 Aug 13
Icahn, who has an estimated net worth of $20 billion, has recently been extensively involved in efforts to keep Dell from going private and he also holds a 16% stake in Nuance, the speech recognition company that Apple uses for Siri.

Update: According to Bloomberg, Icahn has taken a position of at least $1 billion in Apple and is projecting the stock price to rise to over $600.

Update 2: Apple issued this statement regarding Icahn's investment:
We appreciate the interest and investment of all our shareholders. Tim had a very positive conversation with Mr. Icahn today.
Update 3: The Wall Street Journal has more from an interview with Mr. Icahn.
"This is a no brainer to go buy stock in a company that can go borrow" at a low rate, Mr. Icahn said. "Buy the company here and even without earnings growth, we think it ought to be worth $625."

Mr. Icahn's thesis rests on Apple borrowing at about a 3% interest rate and buying back shares right now, likely at around $525 a piece. That would send shares to $625, Mr. Icahn says, without taking into account any earnings growth.

Top Rated Comments

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46 months ago
Stock price and market manipulation at it's finest?
Rating: 54 Votes
46 months ago

... and AAPL is up 4.5%

And with that, Icahn just made everything that Ellison said yesterday a crock.

Rating: 20 Votes
46 months ago
I guess that must explain why AAPL is up over 4.5% today.
Rating: 15 Votes
46 months ago
Apple is doomed.
Rating: 13 Votes
46 months ago

Well glad to read something positive lastly. Sick of all the idiots coming out of the woodwork bad mouthing Apple. Who is it, Samsung or Google paying these people.

All I feel is hate hate hate for Google and Samsung. Feel like beating the crap out of the next Korean I see. relax I wont. Feel like smashing the next android piece of crap i see. This is just sick. Making me feel sick. Might have to lay off the rumors website for a while.

Sorry, but this is really how I feel when I read this column lately.

You need to go outside and seek help immediately. I'm being serious, your post is pretty indicative of someone who needs help working through some larger issue.
Rating: 13 Votes
46 months ago

... and AAPL is up 4.5%
Rating: 11 Votes
46 months ago
Having someone influential say Apple is undervalued: great.

Having Icahn be that someone: not so good.

This could be very very very problematic.
Rating: 11 Votes
46 months ago

Stock price and market manipulation at it's finest?

I'm smelling that to. Goes along with the quote, "The best way to predict the future is to make it."
Rating: 11 Votes
46 months ago

Stock price and market manipulation at it's finest?

I'm not sad the price is shooting up, but yeah, always suspicious of this. Let's see if Icahn cashes out the second it reaches its peak and then tweets about how overvalued Apple is as he shorts the stock.
Rating: 10 Votes
46 months ago
Is this the same Icahn that wanted new Apple management? Is this the same Icahn that wanted Apple to sell bargain-priced hardware at discount chain stores which would have diluted Apple's image?

Not sure how great this news is.

Carl Icahn gunning for Apple

April 01, 2009

The high-profile investor believes Apple is due for a management shakeup -- and a drastic change in focus

Billionaire investor Carl Icahn intimated on Tuesday that after losing his bid to take over Yahoo last year, he has set his sights on Apple. Should Icahn succeed in his takeover effort, he has a radical strategy planned for Apple: To reposition the company's products as bargain computers.

Icahn has a history of pressuring companies to change their ways, and because he holds -- or has the resources to buy -- massive amounts of stock, he is often able to ensure that his voice is heard. When Yahoo rebuffed Microsoft's buyout propositions, Icahn famously stepped in, demanding that Yahoo acquiesce to Microsoft's offer and threatening a proxy fight for control of the company if he did not get his way.

Now, Icahn has designs on pushing Apple in a new direction. He claims to see a "leadership vacuum" at the company and plenty of opportunity to expand the company's user base. "Apple has aggressively pursued a niche market," Icahn said. "It has been successful in that niche, but that is only one small piece of the pie. By cutting itself off from lower price points, it is capping its potential for success."

Icahn says that Apple has pursued branding prestige with too much vigor, noting that "all the prestige in the world won't get somebody to buy a laptop for $1,000 when he could buy the same one for $600," a line of attack Microsoft's Steve Ballmer recently used.

In Icahn's view, Apple should split its product line in two, maintaining "prestige" products on the higher end, but also introducing a differently branded line of bargain-priced hardware and selling it at discount chain stores, thereby extending Apple's reach among retail outlets and not just consumers.

Apple does have some presence in retail chains; it sells its popular iPhone handheld at Wal-Mart, for example. But the company has been reluctant to stray too far from its own Apple Stores and other official Apple retailers.

Although he did not say exactly how he plans to exert pressure on Apple to change its ways, Icahn historically has shown an affinity for proxy fights in which he installs individuals sympathetic to his views on the board of directors of a given company, taking the fight from public statements to the very leadership of the firm. In Apple's case, Icahn may push to install himself as CEO if merely taking over the board doesn't give him enough power to push the company in his proposed direction, suggested Lance Hawkins, an analyst at Redwoods Research.

Hopefully he'll take a hand-off approach this time.
Rating: 9 Votes

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