What do you do when you don't have confidence in a company's ability to manage its cash? Buy up the company's stock while at the same time berating it. That's what Carl Icahn is doing with Apple as his brings his stock investment in the iPhone and iPad maker up over US$3 billion.
Carl Icahn has a $3 billion investment in Apple and is pushing for a more aggressive stock buyback
In a post on Twitter he said, "Having purchased $500 million more $AAPL shares in the last two weeks, our investment has crossed the $3 billion mark yesterday."
We feel $APPL board is doing great disservice to shareholders by not having markedly increased its buyback. In-depth letter to follow soon.
He went so far as to call buying Apple stock a "no brainer," despite his concern that the company isn't buying back as much of its stock as he would like. The buyback he's referring to is Apple's program to repurchase $60 million of its stock by the end of 2015 -- a number that he feels should be up around $150 million.
It's a safe bet his letter will push his view that Apple needs to be more agressive in its stock buyback program, and may well speak poorly about the company's board of directors for how it's handling the stock and big cash horde.
In a CNBC interview Wednesday morning, Mr. Icahn said, "There's no one on Apple's board that is a finance guy. I'm criticizing Apple's board, not the management."
The irony for Mr. Icahn is that he knows he's in a stronger position to keep buying up more of Apple's stock as long as the current buyback program isn't expanded. As Apple buys back more stock, the value of what's left on the market can rise. Since Apple isn't buying back as much as he'd like, he can purchase more at a lower price.
Apple will host its annual stockholder meeting on February 28 and the share buyback program will likely be a hot topic for many investors. Mr. Icahn has backed down from his more agressive buyback proposal, but would still like Apple to increase its investment by $50 million.
Apple is currently trading at $552.84, up 3.77 (0.69%).