Carl Icahn: Will someone rid my portfolio of this rotten Apple? Billionaire activist investor Carl Icahn has offloaded his Apple shares after the stock dropped below $100 a piece this week following the vendor's first sales slip in 13 years. The world's most valued tech company reported a 13 per cent drop in turnover to $50.6m for the three months ended 31 March, Apple's Q3 of fiscal '16 …
Clearly, most of us are NOT like him and that's a good thing. Yes, most of us would love to make even portion of that and then go enjoy life and our friends and families. Him and is ilk are only interested in the amassing of wealth and really don't give a rat's ass about anyone else on the planet. I'll take my life instead of his, thank you.
One of the problems talking about altruism is that people who manage to amass vast fortunes are usually of a personality type that means that they are quite happy to do whatever it takes at the expense of everyone else and stepping on people is not going to register on their conscience.
An person who is altruistic and considers other is less able to compete in such a world.
I am certain that I couldn't use up even 10% of a $2Billion dollar windfall to live my life so the rest of it would have to be given away to where it could do useful stuff for other people. But because I think like that, I am never going to be stupidly wealthy.
With the focus of Apple's revenue and income growth moving to China, it is a riskier investment given the different political climate. I'd have assumed that he was more of a risk taker though - with Tim Cook at the helm I'd bet on Apple to keep the communist party in China sweet for some time to come.
Just so. Wall Street has an amazing habit of running growth tech companies up to insane prices. Look at the history of Cisco for a graphic example. The current stock prices of the darlings of the Internet advertising boom (Facebook, Twitter, Google, and the like) reflect the view that their historical growth rate will be sustained for a decade or more to come, and that's not just unlikely, it's impossible. If you extrapolate their future earnings from their current prices, Wall Street expects each one of them to soak up the entire advertising spend of the entire planet .... which seems unlikely, given that there are several of these giant tech darlings and only one planet. Total world advertising spend (all media, print, web, outdoor, radio, TV, everything) is essentially static: it hasn't changed much in decades other than in (approximate) line with overall economic growth.
Now you might argue that one of them will end up with earnings on that scale. It's not impossible after all. But they can't all have 100% of the same cake!
Apple, like most (all?) of the other tech darlings will do a Cisco. The company will remain successful, will still generate huge profits, might even continue to grow a bit .... but not at a pace anything like fast enough to justifty the ridiculous share price. In the medium to long term, going short on all of the giant tech darlings (Facebook, Apple, Microsoft, and etc.) is a can't lose strategy. You might (might!) be wrong with one of them, even two of them, but you'll still be a mile ahead.
(Least likely to decline: probably Amazon, followed by Google. Twitter is walking dead; Facebook has hit the wall, Microsoft .. less said the better; Apple is well past its peak.)
He owned almost 1% of the company, over $5 billion worth. Even in a stock as heavily traded as AAPL, selling 50 million shares into the market is going to cause to the price to dip noticeably if done over only a couple days. Perhaps that's one of the reason for the big spike in daily trading volume the last couple days? Or did he sell it a few months ago, and only announced it now after the recent drop, to make himself look smart?
Well, the downtick in Apple's sales won't really have surprised anyone.
Pocketing $ 2 bn in profits is smart, even if the guy is an arse.
But it's nice to see that he managed to get Apple to load up on debt for buybacks and dividends. Now, he's gone but the, admittedly cleverly structured, debt is still there and Apple just increased its dividend.
The amount of debt they "loaded up" is barely 20% of their cash pile. I think that was a good thing, might as well take advantage of the historically low interest rates since they clearly aren't going to bring that cash back to the US anytime soon. As an investor I worry anytime a company has a large cash pile, because it encourages pointless wasteful acquisitions (see HP and Microsoft for several good examples of these over the past 15 years) so I kind of wish they'd take on another $100 billion in debt to return more money to shareholders.
Fortunately Tim Cook doesn't seem to be any more interested in big acquisitions than Jobs was, but Cook won't be CEO forever and the next guy might say "hey, what should we do with these several hundred billion dollars we don't want to bring into the US, let's buy Alibaba and Baidu to go big in China!"
I can't help but think there is an element of 'Short and distort' at play here.
Sell AAPL, publicly announce this as soon as you're done and make sure many people follow. Once the price lowering effect has worn out buy the same position in AAPL back at lower cost and wait for it to rise again. It could be a quick way for someone like Icahn to make a quick couple of million dollars in a few weeks.
Maybe so. Someone who owns a large enough amount to help the stock fall by selling into the market at a quick clip, and who is 'newsworthy' enough that what he says may affect others and make them abandon their positions is able to do this. More power to him if he can cause weak hands to sell and buy back in at a lower price. I wish I had the power to move markets, not because I actually want to but because it would mean I was easily rich enough to retire right now :)
He did say he still likes the stock, so no one should be surprised if he isn't back in someday. For all we know he sold a few months ago and will start buying back in next week once the announcement he had sold has whatever effect it is going to have on other traders.
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