Carl Icahn, the legendary investor has grabbed a large stake
after he fought a long battle with Michael Dell to grab a
majority stake in the computer maker
Dell Inc. (
. This move by Icahn has added to the substantial pressure
exerted on Apple by some shareholders to repurchase shares.
Icahn is of the opinion that the Apple stock is currently
undervalued, and suggested Tim Cook, CEO of Apple, to buy back
additional shares. It can be safely inferred that Icahn is
building up his position in large technology companies at a time
when stock prices are trading low.
We believe that CEO Cook is facing constant pressure from
different investor groups and hedge fund managers, like David
Einhorn, to return some cash to investors in the form of share
buybacks. The 22% fall in Apple's share price over the past one
year has only added to the displeasure of the investors caused by
the company's slow growth.
Apple has not yet confirmed the exact size of Icahn's stake,
but as per data available from Bloomberg, it is worth more than
$1.0 billion. This is less than a quarter of a percentage point
of the company's market capitalization of $444.8 billion.
Icahn strengthened his position over the last one month as he
foresees a good return from his investment in Apple. He expects
the stock to move up as high as $600 and is confident of the
current management's capability.
It is to be seen how things shape up in the future for Apple
as investors cheered Icahn's move. The company is expected to
resume growth with the release of new iPhone and iPad by the end
of this year. As per industry sources, Apple is expected to
launch the new version of its iPhone on Sep 10, followed by an
Earlier, Apple succumbed to the pressure created by David
Einhorn to start a buyback program. Apple bought back $16.0
billion worth of shares in the recently concluded third quarter.
Moreover, the company plans to repurchase $100.0 billion worth of
shares by 2015.
In such a scenario, the involvement of a prominent figure like
Carl Icahn will put Apple's Board under further pressure. Icahn
is known for his aggressive investing style and although his
current stake is not of a proportion to make any substantial
change in Apple, his presence will keep Tim Cook on his toes.
Icahn is trying to buy technology stocks at the best possible
price. Previously, he influenced BEA Systems to sell to
and also made a good attempt to take over Lionsgate. Also, he
grabbed 10% stake in
last year, followed by a purchase of 9% stake in Nuance
Communications, earlier this year.
While Icahn is making his intentions clear by grabbing
controlling stakes in different technology companies, it remains
to be seen how Apple handles this delicate situation.
Currently, Apple has a Zacks Rank #3 (Hold).
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