Activist investor claims the iPhone-maker will soon be worth $1.2 trillion
Billionaire investor Carl Icahn urged Apple’s board yesterday to use its $133bn (£82.5bn) cash mountain to buy back more shares, claiming the tech giant’s stock could soon double in value.
“We believe Apple is dramatically undervalued in today’s market, and the more shares repurchased now, the more each remaining shareholder will benefit from that earnings growth,” said Icahn, who controls around 53m shares in Apple and ranks as one of its top 10 investors.
Apple responded to Icahn’s letter in a statement saying: “As we’ve said before, we will review the programme annually and take into account the input from all of our shareholders.
“Since 2013, we’ve been aggressively executing the largest capital return programme in corporate history.”
Apple has ramped up its shareholder capital return programme since it launched in March 2012 with a $45bn share buyback. This was increased to $100bn in April 2013 and to over $130bn in April 2014, with six quarters remaining to its completion.
Unlike his letter to Apple’s board last year, in which he called for the company’s share buyback to grow to $150bn, yesterday’s letter did not suggest a specific amount.
Shares in the tech giant have now risen over two per cent since Wednesday when Icahn first announced he was writing to the board. Last night they closed at $101.02 on Nasdaq.
“At today’s price, Apple is one of the best investments we have ever seen from a risk reward perspective, and the size of our position is a testament to this. This investment represents the largest position in our investment history,” said Icahn in his letter, predicting shares could soon hit $203.
If shares reach Icahn’s valuation the iPhone-maker would have a total market capitalisation of nearly $1.2 trillion.
Icahn, 78, is one of the world’s most vocal and influential investors, via his holding company Icahn Enterprises, and he has successfully pushed for change at auto rental company Hertz and e-commerce firm EBay.
Icahn has already seen great success from his investment in Apple.
He began building up his stake in August 2013, since then Apple’s share price has soared over 56 per cent.