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back to article Peak Apple? HOGWASH! Apple is 'extremely undervalued,' says Icahn

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 …

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rlc

market manipulation...nothing more.

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I thought that, should be illegal really. Size of his investment followed by the 5% spike he caused = 50 million USD in one day.

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Devil

Nothing more and nothing less. This idiot must be stopped before he wrecks more havoc.

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Agreed, and yet this is legal?

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Anonymous Coward

Parasites

This is not investment, it's purely parasitic behaviour.

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Facepalm

Today in

"Victimless crimes", "White whines" and the modern belief in control: The ontological inadequacy of modern statist thought, we read:

> should be illegal really

Buying or selling shares then bragging about it should be illegal?

How about NOT buying or selling shares then bragging about it? Similar level of danger.

Let's just outlaw the law of demand and supply, and the marginal value theorem at the same time. Hell, let's outlaw being rich.

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Holmes

@Frank14 Re: Parasites

Nope. It's capitalism.

Though the differences are largely subtle and semantic, agreed.

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jai
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Re: @Frank14 Parasites

the trouble is the market is too stupid to realise they're being manipulated.

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@Destroy All Monsters

"Hell, let's outlaw being rich."

For certain values of "rich", yes, certainly.

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Re: Parasites

Agree completely there really is something massively wrong with the corporate/financial world when this guy can keep pulling the same trick.

Buys shares then immediately demands buyback schemes and massive dividends. Never mind it can screw the company long term as rather than investing in R&D or expanding business they line Carls pocket.

Why is there not a limit on dividends to long term holders. So for example you need to have held shares for 24 months before being eligible for a payout? Maybe some sort of sliding scale the longer shares have been held the larger slice of the pie they get. Surely this would stop a lot of the short term shenanigans with sbares?

Stock buybacks should be banned completely just seems to be a way of management fiddling their bonuses to higher amounts and drains money that in many cases should be used to secure the long term future of a company.

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the bubble will burst eventually and it will go out with a fizzle, no matter how many times they say welcome aboard (why is there an apple logo painted over "titanic"? glug glug)

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Gimp

Didn't take long for the vultures to start circling. I guess Apple's brief period of relevance is over. Not a shock. They had recently turned themselves into the American version of Sony - a company that cranks out expensive, shiny stuff that doesn't really out-perform the competition, and that has a limited value in the overall consumer marketplace.

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FAIL

"Buying or selling shares then bragging about it should be illegal?"

Well, why not actually? If he kept it secret and other investors new and used that information to trade it would be by definition insider trading. It's definitely a manipulation of the market.

If bill gates bought a billion USD of RIM shares tomorrow and started talking about how they're awesome and they closed up 10% and he instantly sold the shares people would go apeshit. Why should a) that not be illegal and b) shades in between not saying anything and that not be illegal.

If you buy more than x% of a company you shouldn't be able to PR it. End of story really. I realise it *isn't* illegal but it seems like it should be.

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h3
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Jobs wouldn't have even had the meeting.

If he had responded publicly I think it would have been quite amusing.

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Just don't hold the shares that way. Not that big of a deal.

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Trollface

@h3 - >"Jobs wouldn't have even had the meeting."

Yeah - because Steve Jobs never kowtowed to billionaire investors.

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Meh

Who would listen to Carl Icahn?

Why would Tim Cook listen to Carl Icahn? Does Icahn have any advice worth listening to for a company that doesn't plan to kill itself?

Isn't $20 billion enough for Mr. Icahn? It's not like he has a big family full of heirs to distribute his possessions to when he croaks.

Where is the SEC in all of this? Isn't the SEC supposed to protect the interests of shareholders against harmful individuals?

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Big Brother

Re: Who would listen to Carl Icahn?

> Where is the SEC in all of this? Isn't the SEC supposed to protect the interests of shareholders against harmful individuals?

LOLNO. Is there a "harmful individual" detector that you can buy at Radio Shack?

The SEC is there make the smalltimers feel that there is someone to protect the interests of shareholders. The last 20 years of record should be proof enough of THAT.

Fact is:

1) YOU decide to become "shareholder"

2) You better protect your interests yourself.

Oh wait, the government decides that you become a shareholder via your pension scheme... SUCKS

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Re: Who would listen to Carl Icahn?

Cook's in the corner with his head (still) up his arse.

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corporate raider

You were right the first time.

How greedy can you get.

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Unhappy

Re: corporate raider

I am guessing that greed stopped being a motive a long time ago. It's now a game and one that is played with everyone else's money.

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pump & dump?

Isn't that illegal?

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Re: pump & dump?

This was my first thoughts when I saw this on the BBC yesterday

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Not by a long shot.

jake, prosecuted pump-and-dumpers are generally charged with counts of fraud. Whatever Icahn’s faults are, I have no doubt that he pays due attention to his legal counsel, and that they have informed him that his statement “We believe the company to be extremely undervalued” remains (in the eyes of the law) one non-insider’s non-fraudulent opinion, rather than false information about a security for the purpose of inducing others to purchase it. For purposes of comparison, find an article on the statements that 50 Cent made on Twitter regarding HNHI, for which he would have been viewed as an insider; his statements remained on the legal side of the fence, and they make Icahn’s statements look like a vow of silence in comparison.

(I have no fiduciary interest in either AAPL or HNHI.)

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Anonymous Coward

'Apple is 'extremely undervalued'

I need to talk up my own trade... But I'll have long existed and be shorting by the time you schmucks get onboard!

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Anonymous Coward

Go Mr Dell!

I am so glad my employer is privately owned, and thus will never run the risk of having to deal with these destructive twats.

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Pirate

Apple in Trouble.

They should be worried when serial asset strippers, carpet baggers,speculators and divestors (opposite of investors?) take an interest.

Icahn may be none of these, but certainly his pronouncements are designed to increase profit for icahn.

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Hmmm now...

If you know that your buying of stock will inflate its price because people think you're 'a bit special' (and Icahn certainly fits into that category though perhaps not the one he intended), then isn't that insider trading?

+4.8% on 1BN overnight (pretty much) is a good enough close in of itself, too.

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Talking to the board

I guess it's borderline. He is perfectly within his rights to demand more debt (and, therefore taxpayer)-funded share buybacks or anything else and to solicit support from others for this. But to suggest that you have special access to the board or are privy to future plans is naughty. I guess it comes down to interpretation: is here implying influence or are we inferring it? Icahn's no fool and has enough cash to pay lawyers to fight any possible case. Then, unfortunately, there are the facts: Apple is probably slightly undervalued based on the p/e ratio, and, it has more than enough cash in the bank to justify payouts either in the form of tax inefficient dividends (taxed as income) or buybacks (taxed as capital gains).

Apple will have to tread carefully on this. If Icahn can ally himself with another couple of investors he can force the board to consider his proposals officially. Even if a vote on the issue were rejected, the whole process would be highly disruptive as can be seen at Dell.

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jai
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false "facts" within the article

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

I'm sorry, but THAT is hogwash right there.

Jobs died on the 5th October where AAPL stock was priced at 377.37

Today, the stock is priced at 489.

The "Peak" above 700 that you keep referring to was 6 months ago - well after he died, and well within Cook's reign.

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Paris Hilton

Reality distortion fields take a while to collapse

To be more specific, Cook didn't make any real decisions in the first few months after Jobs died because the forward planning was already there, he just needed to carry it out.

That's why so many new CEOs start with a massive restructuring - it's to stamp their predecessor into the mud and get people to think any success is purely down to them and not the predecessor. And any failure must be their predecessor's fault, of course!

Now that most of Jobs' plans have already been done or deemed irrelevant in the current market, Cook is on his own.

Apple have a huge cash pile but not really much else - rather like Microsoft under Ballmer. That much cash goes a long way, down the drain or otherwise.

They're also very behind on technology and are fighting several ridiculous legal battles.

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Carl Icahn sees opportunity

Of course he does, an opportunity to pump up the stock price, get his payout, and sell higher than he bought.

That's what he's doing, nothing more, nothing less. He doesn't believe in Apple - if he did he'd have bought stock in it decades ago. I can't say he didn't, but the billion he just plunked on the table does not mean he believes in the company, it means he's lining himself up for more.

Because that is what he does and everyone knows it.

What I don't get is why that kind of person gets press time. Who cares what he says ? He's lying anyway.

The headline should have been "Notorious corporate raider lining up Apple as next victim".

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Chats with Cook

...wasn't the original spirit of shares that investors got a say in the direction of the company?

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Re: Chats with Cook

Not really, more the opposite.

The driver behind it is mostly about limitation of liability, and ease of transference of ownership. As a shareholder you have a barrier between you and the company's problems (so if the company were sued to oblivion, you pay no more in, for example). If you were a partner in an old-style partnership you are personally liable. As a partner if you want out, the partnership has to buy you out, which can be a pain in the neck. Likewise if you die it's a pain. With shares the name on a piece of paper changes and the two parties agree a price independent of the company.

It's a separation of ownership and control, which is fundamental to how this works.

Having shares gives you ownership, but not control You grant control to the directors of the company, and every year get to vote on their continuance in office or otherwise. That is how you get your direction of the company.

The other way is to say "I don't like the direction CompanyX is going in, so I will sell my shares and invest in CompanyY whose direction I like".

Of course, if you own a lot of shares it's likely you'll get direct access to directors as they know you can have a big influence come AGM and director re-election time (or just dump shares and crash the share price, which causes them and other shareholders some pain).

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Anonymous Coward

Ichan swooping in on the weak! This is not good news for Apple. Having intrest from a corporate scavenger.

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Could be great news for Nokia, RIM and the usual Android suspects. Not short term but in the medium to long term as normally once Icahn finishes picking over the corpse there may not be a lot left.

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iHolo Jobs Needed. Pronto

We need a holographic Steve Jobs, like yesterday. Just think of the FUD recants ... let alone the share price changing direction faster than a British politician's morals.

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MJI
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The headline worried me....

Until I saw it was only about the tech company and not the main ingredient in cider

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Dear Apple,

Be scared! Be very scared!

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Unhappy

If it was my company I'd sooner see the four horsemen of the apocalypse on the horizon than Ichan

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Icahn can't play his usual game this time

Typically he buys a big enough chunk of a company to get a seat on the board, and controlling enough of the outstanding shares to be able to ram through proposals at annual meetings, etc. The implied threat is "if I dump all my shares at once the share price will drop like a rock, and shareholders will lose confidence in the CEO".

As the author points out, even if he put his entire fortune into Apple (which he hasn't) it would be maybe 1% (then only if he's worth $5 billion) He may be big enough to make the news with his comments, and score a meeting with the CEO, but such a tiny share won't let him push anyone around, nor will it inspire much fear in Cook or anyone else about what would happen if he sold all his shares at once.

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Anonymous Coward

iCahn

what a complete iCahnt.

The worst thing is the IDIOTS that blindly follow this iDiot.

You know the ship's in trouble when the King Rat has arrived on board.

Apple are being screwed by the money men, they are being driven to be less like Apple and more like just another tech company to try to squeeze more groats out of a saturated market.

The new device every couple of years was too much for the console market.

If you have an ipad 2 you don't NEED a ipad 3, or 4 or mini. You'll get a new one when it's broken.....IF there isn't anything better on offer.

Ipods are virtually dead. The market has moved to cloud music services, the average non-apple phone can store music anyway, EASILY without involving that sprawling mess called iTunes.

iPhone, iPod and iPad were great ideas, you've ridden that wave, here comes the beach. Keep repeating the question Apple, the answer won't change - you'll be scratching around for upgrades not new business.

Android is eating you alive, despite trying to DESTROY it, and Samsung will annihilate you. It would have done anyway if the US courts didn't protect you so much.....

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as iffy as they are what about the rest

yes, in hard times Apple is a safe haven.

Those billions can make them into useful vulture fund, and as we well know they do not buy high.

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Dilbert

http://dilbert.com/strips/comic/2001-10-15/

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Anonymous Coward

The royalty factor

These people have started to behave as if they were kings. As someone has noted on Simon Cowell, it is no longer a case of promoting any kind of objective assessment; it's "this is so because I think it is, and I am very influential so you must listen to me".

What is it about human beings that makes them so depressingly stupid? They have the opportunity for democracy and fairness, and they promptly hand over control to acquisitive power freaks.

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