Carl Icahn pressures ‘extremely undervalued’ Apple for larger buyback

Natalie Ceeney 02

Activist investor Carl Icahn has taken a “large position” in Apple, believing the technology giant is “extremely undervalued”, and is campaigning for the firm to return more cash to shareholders.

Apple’s share price jumped 4.75 per cent yesterday after the billionaire investor took to Twitter to express his feelings on the firm. The stock closed at $489.57 (£317.10), up from the $476 it started the session at.

Icahn has been speaking to Apple chief executive Tim Cook about expanding the firm’s plans to return money to shareholders.The company already plans to hand $100bn to shareholders by the end of 2015, through raising its dividend and buying back shares.

Apple’s shares hit a record of $702 in September 2012, but have since fallen by around 30 per cent. They have dipped below $400 twice this year as investors worry about slower growth and growing competition in the smartphone market.

Icahn tweeted: “We currently have a large position in Apple. We believe the company to be extremely undervalued.

“Had a nice conversation with Tim Cook today. Discussed my opinion that a larger buyback should be done now. We plan to speak again shortly.”

Icahn’s comments threaten to restart the debate on what Apple should do with its vast cash pile. Hedge fund guru David Einhorn is among the investors that have put pressure on the firm to change its capital allocation strategy.

Apple confirmed that Icahn had spoken with Cook, telling the BBC: “We appreciate the interest and investment of all our shareholders. Tim had a very positive conversation with Mr Icahn today.”