Updated Oct. 24, 2013 12:52 p.m. ET
Activist investor Carl Icahn boosted his investment in Apple Inc. AAPL +1.32% Apple Inc. U.S.: Nasdaq [SUP]$[/SUP]531.91 +6.95 +1.32% Oct. 24, 2013 4:00 pm Volume (Delayed 15m) : 12.23M U.S.: Nasdaq [SUP]$[/SUP]533.90 +1.99 +0.37% Oct. 24, 2013 7:59 pm Volume (Delayed 15m): 1.51M P/E Ratio 13.18 Market Cap $476.92 Billion Dividend Yield 2.29% Rev. per Employee $2,225,220 10/24/13 Tesla Motors Taps Apple Talent 10/24/13 Carl Icahn Continues to Push A... 10/24/13 Live Blogging Carl Icahn on CN... More quote details and news » AAPL in
Your Value Your Change Short position by 22% to 4.73 million shares, and continued to push for a massive $150 billion buyback at the company, according to a letter he sent to Apple Chief Executive Tim Cook.
The billionaire investor suggested the company use a self-tender offer to buy back the stock, and said that he himself wouldn't sell his shares and take a profit.
Billionaire investor Carl Icahn has launched his own website and wasted no time sending a letter to Apple CEO Tim Cook indicating he has boosted his stake in the company by 22%. David Benoit reports.
"There is nothing short term about my intentions here," he said.
Mr. Icahn now owns about 0.5% of Apple—a stake worth roughly $2.5 billion based on the stock's closing price Wednesday of $531.91.
Mr. Icahn suggests doing the buyback at $525 a share and said that three years after the buyback, with the benefit of earnings growth, Apple's shares could hit $1,250.
[h=4]Apple's Inner Circle[/h]See who's who in Apple's inner circle.
A person close to Apple said there was no obvious reason any shareholder would tender into a buyback at $525.
The company has already launched a plan to return $100 billion to shareholders, including a $60 billion buyback, over the next three years, a plan it says is the largest ever and that it will revisit each year. Referring to that plan in his letter, Mr. Icahn wrote that while it "may seem like a large buyback, it is simply not large enough given that Apple currently holds $147 billion of cash on its balance sheet."
Mr. Icahn in August disclosed via Twitter that he had bought a stake in Apple and was talking to Mr. Cook. The pair had dinner a few weeks ago at Mr. Icahn's apartment in New York, Mr. Icahn has said.
"As we proposed at our dinner, if the company decided to borrow the full $150 billion at a 3% interest rate to commence a tender at $525 per share, the result would be an immediate 33% boost to earnings per share," Mr. Icahn wrote in his letter to Mr. Cook.
Bill Gross, the founder and managing director of Pacific Investment Management Co. LLC, or Pimco, tweeted that Mr. Icahn should "leave Apple alone & spend more time like Bill Gates. If Icahn's so smart, use it to help people not yourself."
When Mr. Icahn first began discussing the buyback, shares of Apple were below $500 a share.
Mr. Icahn said in an interview Thursday that his math still worked even if Apple was forced to buy back shares at above $525, though the recent share gains show why Apple should move quickly.
"A lot of critics just keep saying why doesn't Icahn just leave our companies alone," he said. "To me that is like saying: Why didn't Teddy Roosevelt leave the monopolies alone when they were strangling our economy."
In an interview with CNBC Thursday, Mr. Icahn said his average cost of the Apple investment was about $440 a share—which would put him in line for over $400 million in paper profits at this point.
Mr. Icahn also said that if Apple didn't follow his plan he would at least "test the waters" on a potential proxy fight to unseat some board members. He said he himself wouldn't join the board.
Mr. Icahn revealed the letter to Apple's CEO on Thursday as he launched a website for corporate-governance arguments, though the site was hit with a technical glitch that made accessing the letter difficult within the first hour.
His website includes a drawing comparing corporate America to the feudal system, a complaint Mr. Icahn often voices. The picture was drawn by artist Chad Crowe.
Mr. Crowe said the experience of working with Mr. Icahn was "positive, fun and eccentric." Mr. Crowe has drawn illustrations for a wide range of publications, including The Wall Street Journal.
Write to David Benoit at [email protected]
Activist investor Carl Icahn boosted his investment in Apple Inc. AAPL +1.32% Apple Inc. U.S.: Nasdaq [SUP]$[/SUP]531.91 +6.95 +1.32% Oct. 24, 2013 4:00 pm Volume (Delayed 15m) : 12.23M U.S.: Nasdaq [SUP]$[/SUP]533.90 +1.99 +0.37% Oct. 24, 2013 7:59 pm Volume (Delayed 15m): 1.51M P/E Ratio 13.18 Market Cap $476.92 Billion Dividend Yield 2.29% Rev. per Employee $2,225,220 10/24/13 Tesla Motors Taps Apple Talent 10/24/13 Carl Icahn Continues to Push A... 10/24/13 Live Blogging Carl Icahn on CN... More quote details and news » AAPL in
Your Value Your Change Short position by 22% to 4.73 million shares, and continued to push for a massive $150 billion buyback at the company, according to a letter he sent to Apple Chief Executive Tim Cook.The billionaire investor suggested the company use a self-tender offer to buy back the stock, and said that he himself wouldn't sell his shares and take a profit.
Billionaire investor Carl Icahn has launched his own website and wasted no time sending a letter to Apple CEO Tim Cook indicating he has boosted his stake in the company by 22%. David Benoit reports.
"There is nothing short term about my intentions here," he said.
Mr. Icahn now owns about 0.5% of Apple—a stake worth roughly $2.5 billion based on the stock's closing price Wednesday of $531.91.
Mr. Icahn suggests doing the buyback at $525 a share and said that three years after the buyback, with the benefit of earnings growth, Apple's shares could hit $1,250.
[h=4]Apple's Inner Circle[/h]See who's who in Apple's inner circle.
A person close to Apple said there was no obvious reason any shareholder would tender into a buyback at $525.
The company has already launched a plan to return $100 billion to shareholders, including a $60 billion buyback, over the next three years, a plan it says is the largest ever and that it will revisit each year. Referring to that plan in his letter, Mr. Icahn wrote that while it "may seem like a large buyback, it is simply not large enough given that Apple currently holds $147 billion of cash on its balance sheet."
Mr. Icahn in August disclosed via Twitter that he had bought a stake in Apple and was talking to Mr. Cook. The pair had dinner a few weeks ago at Mr. Icahn's apartment in New York, Mr. Icahn has said.
"As we proposed at our dinner, if the company decided to borrow the full $150 billion at a 3% interest rate to commence a tender at $525 per share, the result would be an immediate 33% boost to earnings per share," Mr. Icahn wrote in his letter to Mr. Cook.
Bill Gross, the founder and managing director of Pacific Investment Management Co. LLC, or Pimco, tweeted that Mr. Icahn should "leave Apple alone & spend more time like Bill Gates. If Icahn's so smart, use it to help people not yourself."
When Mr. Icahn first began discussing the buyback, shares of Apple were below $500 a share.
Mr. Icahn said in an interview Thursday that his math still worked even if Apple was forced to buy back shares at above $525, though the recent share gains show why Apple should move quickly.
"A lot of critics just keep saying why doesn't Icahn just leave our companies alone," he said. "To me that is like saying: Why didn't Teddy Roosevelt leave the monopolies alone when they were strangling our economy."
In an interview with CNBC Thursday, Mr. Icahn said his average cost of the Apple investment was about $440 a share—which would put him in line for over $400 million in paper profits at this point.
Mr. Icahn also said that if Apple didn't follow his plan he would at least "test the waters" on a potential proxy fight to unseat some board members. He said he himself wouldn't join the board.
Mr. Icahn revealed the letter to Apple's CEO on Thursday as he launched a website for corporate-governance arguments, though the site was hit with a technical glitch that made accessing the letter difficult within the first hour.
His website includes a drawing comparing corporate America to the feudal system, a complaint Mr. Icahn often voices. The picture was drawn by artist Chad Crowe.
Mr. Crowe said the experience of working with Mr. Icahn was "positive, fun and eccentric." Mr. Crowe has drawn illustrations for a wide range of publications, including The Wall Street Journal.
Write to David Benoit at [email protected]