Icahn slurps another $500m in Apple shares, demands buyback AGAIN Activist investor Carl Icahn has yet again called on Apple to start scooping a few handfuls off its mountain of cash and handing it back to shareholders. His latest call came after he upped his stake in the fruity firm by a whopping $500m. The agitating stockholder tweeted that he'd upped his share of the fruity firm to $3.6bn …
How does them ignoring him damage them? If anything it draws attention to him (and others) believing there is a lot of value in AAPL and they are almost certainly undervalued. This could just be his plan - i.e. people see him buying and pile in pushing the share price up and he is dollars in.
He turns his attention to your pet country next? What then?
Don't count your chickens and all that.
Personally, I hope he comes a cropper just so that he thinks long and hard about this 'raping and pillaging' of companies in the future.
He has already urned his attention to Ebay. Who's next? Google perhaps?
It could all end in tears.
Although I find them all quite silly and loaded with emotions the parties involved can't even see, I understand the Windows vs Linux, Samsung vs Apple, Ford vs Chevy debates. But I don't understand your 'you vs Apple argument via proxy'.
I can see fairly clearly you don't like Apple, but I'm not sure you understand how publicly traded companies work. If Apple gives in to Icahn it will increase the value of Apple stock instantly. Sitting on huge piles of cash is bad for business in general. It means you aren't growing as fast as you should. If Apple starts using some of their money it will please a huge number of people immensely and Apple valuations will go even higher.
Point being, your argument is actually helping Apple and I'm nearly certain that's not what you are aiming for...
It wouldn't damage them at all; Apple are sitting on a vast cash pile, of shareholders' money, that they have no need for. If they returned, say, £100bn to shareholders it wouldn't damage the company at all.
Icahn may be a loathsome creature of capitalism, and is obviously out to enrich himself, but the only losers would be ex-shareholders who will have forgone some value when they sold out.
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easy and cheap for the company to borrow the money
Which makes no financial sense.
They're sitting on a big pile of money.
Not only is he suggesting they give it away, to people including himself, but that they incur debt by borrowing to do it.
I understand his motives. He just wants to get richer, quicker, instead of running the risk that the market's natural movements may devalue his stock or may increase it's value, but both other a period of time.
What I don't understand is why any company in the past has paid attention to him?
It's not like they owe him anything is it? That how buying stock works. Your reward for taking the risk in investing is if the market goes up before you sell them.
Let's keep this in perspective - According to the Daily Telegraph, Icahn's investment represent a share of 0,6 per cent of the total.
Which puts him in the top twenty, but he's nowhere near the most important. He is just making a lot of noise to try and put cash in his pocket right now, rather than wait for the longer term development.
(or 0.6% of it ) but once he gets his way, how long do you honestly think he will hold onto his shares?
As soon as the $$$$ is returned he will sell up and move onto another target. Rinse and Repeat and bank a few gazillion in the process. What if Google or HP or IBM or .... is next on his Radar? What then?
His only aim is to increase his net worth. He cares little about other shareholders. They seem to be a minor inconvenience.
As a very minor and longstanding Apple stock holder(2000 shares bought in 1995) I will be voting against him. I have almost decided to go to the AGM in person to make sure he is voted down. Am I tempted to sell up? No I'm not but if I did, I could buy a new car tomorrow but I'll make do with my 10yr old Volvo.
He is a bloodsucking leech on companies.
Because at least in part it's *his* company
Are you sure you aren't confusing the difference between shares and stock?
The headline says shares - although possibly El Reg is confusing the two?
Or maybe it's Icann that's confused the two and thinks he has more rights than he really does.
Stock means you have a piece of ownership. Shares just mean you've given the company some money in the past to increase it's capital then, in the hope that in the future the company is worth more so you'll receive more money back when the share matures (or you sell it on to someone else for a profit in the mean time).
Shares - http://en.wikipedia.org/wiki/Share_%28finance%29
Stock - http://en.wikipedia.org/wiki/Stock
If they can borrow $50 Billion at 2%, while still earning 3% on their existing cash investments it still ends up increasing their value! Otherwise they will have to pay almost $30% (or higher) to bring the money back "on shore" to the United States. Can't blame Apple for not wanting to bring money back to the US only to have the NSA, I mean the Government pocket a good portion of the change!
+500m is what another 0.1% of the 500bn Apple are currently worth - can't imagine Apple are that bothered by what he says - they call him an 'activist shareholder' which makes it sound like some white knight when in reality he's trying to make a profit for himself.
So he's got about 0.7% of the firm now - not really that much.
Icahn is holding a lot of power at Apple with his current stake. The nature of stock trading is such that it doesn't require one to be holding lots (compared to how many are out there) of shares to have lots of power. As companies grow they tend to attract every possible type of investor. It results in zillions of shareholder voices all screaming simultaneously for completely different things. The chaos created allows management to kind of slip through the crowd with nobody seeing them.
Overall that's good, it provides a buffer for management to steer the company as they see fit. The disadvantage is that a single clear voice with a consistent message can be heard over the din of the other voices. And not just heard by management, it is heard by everyone in the crowd as well. You can't ignore that clear, consistent message forever. There's a very real risk that if you ignore that clear voice too long, the crowd will start to think there's no chance you'll ever hear them. That's when previously competing voices start to band together and replacing people. It's a really bad scene and where Icahn types like to operate. Create a logjam and seine out what you want and let the rest wash away.
Point is, you only need enough shares to be heard. If your voice is clear you can force a lot of things. Things like this are very much public threats of armed insurrection. This situation is even more profound, it's more like dropping leaflets in enemy territory warning of incoming attack. Everybody knows Apple is wrong in sitting on this much cash. It is simply stupid, and it won't take a lot to get more people onboard with the plan to liberate that money.
What dross. If you buy a share of a company you own a share of it's assets and it's current and future profits. They do not 'make' anything directly (although lets assume they or someone had to make / do something to gain the cash to buy the shares) but they allow the company to exist, make stuff, employ people etc.
Companies issue shares to raise capital to grow - so are you suggesting we do away with that?
Isn't education a wonderful thing ? If you had it, you'd understand that the entire industrial world you (and I) live in was driven by the invention of the idea of limited companies, allowing people to safely invest in ideas.
Suggest you watch the incomparable James Burke, "The Day The Universe Changed" episode "Credit Where It's Due".
They don't make anything, but they bring the money. The most powerful captains of industry must always, eventually, bow to the people with the money.
Dealing with crap like this is a huge part of how important the CEO is in any company. This sort of thing really tests their mettle. Before Icahn made his announcement he would have already established dialogue with Cook and told him what he wants. He obviously smelled blood and is now pressing his attack.
You can't ignore activist shareholders too long. You've got to deal with them. There's a type of CEO who wants to keep peace badly enough he'll eventually capitulate to activist demands, at least partially. Nothing wrong with that really. It's the most common type of CEO actually.
Then you've got absolutely unmovable CEO's that'll tell you to fuck right off and sink the ship with all hands onboard before they'll bow to pressure. Bill Gates, Larry Ellison, Steve Jobs are/were all this type of CEO. I don't care how badass you think you might be, risking billions of dollars in a willy waving contest is a ballsy thing to do. The Icahn types don't push such CEO's around much. They'll act all tough in public, but it's comparable to Tonga threatening the US or trying to give people on the ISS the finger. It's pointless.
Both types obviously come with their own pros and cons. I've worked under both types and it's very interesting to study the differences. That second type of CEO creates nearly unbreakable bonds of loyalty through sheer force of personality. Granted, that type of CEO, as well as his most loyal subjects, are often true psychopaths. They're great to have if their goals align with yours, but if they don't it is almost impossible to oust them. Their attack dogs will run boards and shareholders into the ground without mercy or remorse. Working for that type almost always results in more money and power for executive staff. But if things go pear shaped all the people who you ignored earlier will just beat the ever loving shit out of you.
The first type is much less stressful to work for. The rewards won't be as great as with the other type, but the work is a lot easier. If you choose to, it is also much more likely that you can get, and stay, married and have a family that isn't actively praying for your untimely demise and the insurance settlement. You are also able to trust people. It's quite nice.
At the moment there's >$100bn sat in the bank not doing anything. Wouldn't that be more valuable back in the economy? I mean it'd mostly go to fund managers but at least then you're supporting the poor of Columbia and the skilled workers of Maranello.
The stuff that went to regular people would be spent on clothes, food, cars, petrol, holidays, shares in different companies. Apple could lead to a multi-billion dollar investment in the economy.
Icahn is the poster boy for short-term thinking. See the stored value, move in, strip it and move on, leaving behind something that may well struggle to cope. To me, he typifies the whole problem with the modern economy, it's all NOW! NOW! NOW! and ME! ME! ME! with no thought as to what happens in ten years. From his perspective, he'll be OK if he's got lots of money under his mattress and who cares about the rest of us.
He isn't an activist, he has no socio political agenda. If he was buying shares to pass a motion to get production on shored to the US or improve conditions in the Chinese factories he would be an activist investor. This guy is just a tool trying to squeeze as much juice out of a successful company to line his own pockets. Let's call him what he is: an investment troll.
Icahn and his ilk trade in value, what value is in the company for them. There's no consideration of the health of the company, not understanding of what will make the company a success. What the company does, what is it worth? Does it make product that people want etc all the good stuff that sustains and brings with it a future, do it have a worth isn't important to them. What's important to them is where can I make my next $.
It used to be called asset stripping rather than activism.
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