Carl Icahn calls Apple a 'no brainer' investment as his stake grows to over $3B

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Comments

  • Reply 41 of 85

    Right on.  Icahn's previous AAPL is standing at about $430.  He needs the price to go up so he can make money (=cash out).  When he does, AAPL takes a hit.  If that cascades, everyone loses (except of course those who can buy at the bottom...) It's functionally stock manipulation on his part with no long term gain for investors, and less flexibility for Apple to use their capital.  

  • Reply 42 of 85
    dasanman69dasanman69 Posts: 13,002member
    newbee wrote: »
    I love the phrase "opportunity cost". Imagine if I had only bet the farm on the last 20 years of Super Bowl winners ... hell, I'd be a multi-millionair for sure. Just think of all that "opportunity cost" wasted. Shameful.

    Hint for sog35 :     "opportunity cost" is Wall Street Jargon designed to fool investors  ..(read suckers) .. into "proving" that the "expert" knows what he is talking about. It's called "baffling with bullshit". 

    I'll simplify what 'opportunity cost' is. I'm often asked to work on Saturday and sometimes Sunday in which I get paid overtime. If on a particular day I don't work and go on a day trip, then that trip cost me whatever I spent that day plus the income I could've earned. Since I had the 'opportunity' to earn and didn't, it gets added to my 'cost'.
  • Reply 43 of 85
    jungmarkjungmark Posts: 6,926member
    sog35 wrote: »
    nice job cherry picking dates.

    again if you see nothing wrong with tying up $150,000,000,000 @ 1% I can't reason with you.

    come back to me after you look at 30 to 40 year market returns (you know the same window as people save for retirement)

    You do realize Apple will continue to invest $150,000,000,000 conservatively even if it falls for Crazy Carl's plan. Any buy back would be from loans. So you want to pay 2-3% interest on billions in loans? For what exactly? So Crazy Carl can reach his target price faster and bolt, leaving Apple with a lot more debt?
  • Reply 44 of 85
    totaltotal Posts: 83member

    but if earnings will be good and share price will go over 600 anyway, is not then better that apple will still have all their 150b cash?  i think it is. i mean whats the difference if share price will be 600+ now or in few months? for long term investors it does not matter i guess.

  • Reply 45 of 85
    newbeenewbee Posts: 2,055member
    Quote:

    Originally Posted by dasanman69 View Post





    I'll simplify what 'opportunity cost' is. I'm often asked to work on Saturday and sometimes Sunday in which I get paid overtime. If on a particular day I don't work and go on a day trip, then that trip cost me whatever I spent that day plus the income I could've earned. Since I had the 'opportunity' to earn and didn't, it gets added to my 'cost'.

    That depends what you define as opportunity. If I say no to working overtime so I can spend some quality time with my wife and children ... is that lost opportunity ?  I consider that gained opportunity. I don't consider family time as a cost. But hey, that's just me ... everyone has to decide for themselves. I guess what I'm saying is that, in my opinion, everything in life should not be judged as a perceived monetary value, .... and unfortunately, that seems to be the case a lot of the times these days, so when someone rails against Apple for the "lost opportunity," without knowing Apple's long term strategy, I just scratch my head in amazement.

  • Reply 46 of 85
    newbeenewbee Posts: 2,055member
    Quote:

    Originally Posted by sog35 View Post

     

    nice job cherry picking dates. ...

     

    again if you see nothing wrong with tying up $150,000,000,000 @ 1% I can't reason with you.

     

    come back to me after you look at 30 to 40 year market returns (you know the same window as people save for retirement)

     

     

     


    You mean like you did with showing a select view of Icahn's stock picks. You showed four stocks that averaged over 100% return ... but his 5 year return was, according to you, only 27%, .... must have had a bunch of losers in there, huh?

     

    There have been multiple times in the past that stock market participants would have killed for a 1% gain as opposed to a 40% loss.

     

    How many times do we have to read about people that lost all of their pensions because various funds lost all of their money or companies went broke and reneged on their pensions, not to even mentioned the times the money was stolen by various "ponzi" schemes, i.e. Madoff, Enron, etc. .... To only remember what supports your belief and disregard the rest is likened to chasing "fools gold". I hope that you know better than to do that.

  • Reply 47 of 85
    dasanman69dasanman69 Posts: 13,002member
    newbee wrote: »
    That depends what you define as opportunity. If I say no to working overtime so I can spend some quality time with my wife and children ... is that lost opportunity ?  I consider that gained opportunity. I don't consider family time as a cost. But hey, that's just me ... everyone has to decide for themselves. I guess what I'm saying is that, in my opinion, everything in life should not be judged as a perceived monetary value, .... and unfortunately, that seems to be the case a lot of the times these days, so when someone rails against Apple for the "lost opportunity," without knowing Apple's long term strategy, I just scratch my head in amazement.

    That's why the word 'cost' is attached to it. It's purely a economic term. Btw I agree, spending time with family isn't a lost opportunity, it's always worth the income not gained.
  • Reply 48 of 85
    maestro64maestro64 Posts: 5,043member

    this guy need to go away, if he really does not think apple is doing the right thing stop investing in the company. Any good investors stays way form companies which are not doing the right things. This what I do. Instead this idiot keeps buying more and complains about Apple not doing enough for the investor.

  • Reply 49 of 85
    dasanman69dasanman69 Posts: 13,002member
    maestro64 wrote: »
    this guy need to go away, if he really does not think apple is doing the right thing stop investing in the company. Any good investors stays way form companies which are not doing the right things. This what I do. Instead this idiot keeps buying more and complains about Apple not doing enough for the investor.

    He can't help it, he's a elitist billionaire alpha male, who thinks that he is entitled to tell people what to do.
  • Reply 50 of 85
    tbelltbell Posts: 3,146member
    Quote:

    Originally Posted by sog35 View Post

     

     

    Carl's current proposal is to buy back $50B all in 2014.  Please note that Apple's free cash flows for 2014 is estimated at $50B.  I agree that doing a $150B buyback in 2014 would be ridiculous.

     

    I would like a larger dividend.  But the problem with dividends is they are almost permanent.  Once you raise the dividend it is very hard to lower it without massive consequences from income investors.  A buyback is temporary and can easily be adjusted each year without consequence.

     

    Apple could easily pay $50B in buybacks in 2014:

     

    I estimate their US cash flow is about $20B

    Float a bond for $30B - a bond won't hurt them because interest rates are still ridiculously low and less shares outstanding means less dividends to pay.  When the bond was floated last year for the buyback it was estimated that Apple may have not lost a single cent after taking into account the savings in dividend payments and tax deductions on interest.

     

    So after floating the bond what would Apples balance sheet look like @12.31.14?

     

    $200,000,000,000 Cash

    $30,000,000,000 bond note

     

    Net cash $170,000,000,000

     

    Keep in mind Apple has already promised to buyback an additional $36B.  All Ichan wants is an additional $14B and to accelerate the buyback while the stock is still cheap.


     

    If Apple ever cannot afford to pay a dividend it will have larger issues, and might need some of that $150 billion. You also don't address how a buy back is good for long term investors, which Carl is not. Apple buying back the stock does very little for Apple and awards mostly short term investors like Carl who want to cash out when the stock gets an artificial bump. Further, Apple's responsibilities are not only to investors, but to the maintaining the health of the company. A stock buy back in which Apple retires the stock does little for Apple. If the stock goes up, Apple has nothing to sell. The only benefit Apple gets is it will have less dividends to pay out, but that amount is insignificant as the amount is tied to profit. In my view, it is a waste of money. Just expand my quarterly check. If Apple has problems where it can no longer give out a dividend, people can just sell. With Apple's financials that realistically will not happen in the next fifteen years.

     

    It is strange nobody is crying for Google to disperse its 50 billion dollar plus cash reserve.

  • Reply 51 of 85
    tbelltbell Posts: 3,146member
    Quote:

    Originally Posted by newbee View Post

     

    That depends what you define as opportunity. If I say no to working overtime so I can spend some quality time with my wife and children ... is that lost opportunity ?  I consider that gained opportunity. I don't consider family time as a cost. But hey, that's just me ... everyone has to decide for themselves. I guess what I'm saying is that, in my opinion, everything in life should not be judged as a perceived monetary value, .... and unfortunately, that seems to be the case a lot of the times these days, so when someone rails against Apple for the "lost opportunity," without knowing Apple's long term strategy, I just scratch my head in amazement.




    Good points.

  • Reply 52 of 85
    tbelltbell Posts: 3,146member
    Quote:

    Originally Posted by sog35 View Post read up on EPS and how effects share price.

    Earnings per share in terms of Apple is not even worth considering. For 2013 Apple earned something like $39.5 per share. Amazon was something like zero dollars, and Google something like $9. If you follow those numbers, Apple's stock should be much higher.

  • Reply 53 of 85
    anomeanome Posts: 1,531member
    Simple. Icahnn wants money. So he buys Apple, and tells everyone else to, so that his investment goes up. Then he complains that they should buy back shares, because that will also drive the value of his investment up. Then he wants them to give out their cash reserves as share dividends, so he gets even more money.

    Then, when he's squeezed all the money he can out of the company, he dumps his stock at the new, higher price, which causes the stock price to collapse slightly. Or maybe, if he's done it right, completely.
  • Reply 54 of 85
    newbeenewbee Posts: 2,055member
    Quote:
    Originally Posted by dasanman69 View Post





    That's why the word 'cost' is attached to it. It's purely a economic term. Btw I agree, spending time with family isn't a lost opportunity, it's always worth the income not gained.

    I agree with both of your statements. I would only add that I'm not big on "economic terms" because, for me at least, they have been used all too often to obfuscate the issue for the "masses" who make up the smaller investor. I'll use the issue of the mid 2000s where the financial industry would bundle high risk mortgages, use their leverage over the ratings industry to "encourage" them to give the new "bundle" AAA ratings and a new name such as "credit swap" or such so they could turn around and sell/off load them to the uninformed consumer who, in a lot of cases had their money tied up in a pension fund that would ultimately lose their "investment"..... and in a lot of cases it was recognized as being an unworthy investment, so much so that a "new investment vehicle" was used to insure against the loss.  ... That thereby guaranteed  profits for everyone, except the final holder of the investment .... sort of a musical chairs game, played with real money . A black mark on the financial industry that already had a few black marks against it. When will we ever learn, when will we ever learn ?  ... (with apologies to Peter, Paul and Mary)

  • Reply 55 of 85

    1. Ever since Apple announced its buyback plan it has consistently accelerated it. People, including Mr. Icahn, need to read earnings reports. They re-accelerate their buyback on a regular basis. Announced an increased buyback several months ago. They will continue to accelerate. Icahn's problem isn't that Apple isn't buying back, his problem is that they're doing it on their own schedule and not some petulant nouveau investor, Mr. Icahn himself.

     

    Sincerely,

    Read actual information instead of vigor and vitriol.

  • Reply 56 of 85

    2. Bitch all you want, but Mr. Icahn thinks this is an amazing buying opportunity. His additional $500 million purchase is more significant than his quibbles with Apple's board. And the board as we must remember have guided the company to be the most successful in the world and according to Icahn, an amazing investment.

     

    Sincerely,

    A little perspective.

  • Reply 57 of 85
    dasanman69dasanman69 Posts: 13,002member
    newbee wrote: »
    I agree with both of your statements. I would only add that I'm not big on "economic terms" because, for me at least, they have been used all too often to obfuscate the issue for the "masses" who make up the smaller investor. I'll use the issue of the mid 2000s where the financial industry would bundle high risk mortgages, use their leverage over the ratings industry to "encourage" them to give the new "bundle" AAA ratings and a new name such as "credit swap" or such so they could turn around and sell/off load them to the uninformed consumer who, in a lot of cases had their money tied up in a pension fund that would ultimately lose their "investment"..... and in a lot of cases it was recognized as being an unworthy investment, so much so that a "new investment vehicle" was used to insure against the loss.  ... That thereby guaranteed  profits for everyone, except the final holder of the investment .... sort of a musical chairs game, played with real money . A black mark on the financial industry that already had a few black marks against it. When will we ever learn, when will we ever learn ?  ... (with apologies to Peter, Paul and Mary)

    You're going to enjoy reading this then.

    http://www.fool.com/investing/general/2013/11/14/stupid-things-finance-people-say.aspx
  • Reply 58 of 85
    newbee wrote: »
    sog35 wrote: »
    I love the phrase "opportunity cost". Imagine if I had only bet the farm on the last 20 years of Super Bowl winners ... hell, I'd be a multi-millionair for sure. Just think of all that "opportunity cost" wasted. Shameful.

    Hint for sog35 :     "opportunity cost" is Wall Street Jargon designed to fool investors  ..(read suckers) .. into "proving" that the "expert" knows what he is talking about. It's called "baffling with bullshit". 

    That is, unfortunately, pure silliness.

    Sog35's examples could have been better (e.g., his assertion that it 'could have put it into the market that gained 30% last year' makes no sense -- it could also have been put into a market that lost a half its value in 2008-09). But the concept of 'opportunity cost' is not some 'Wall Street' conspiracy.

    It is simply an Econ 101 concept that says, 'if you put your investment in A, you're foregoing the opportunity to earn a return from putting it in a risk-equivalent investment, B -- i.e., there is an opportunity cost to the use of capital, sometimes just called a "cost of capital" in making any investment decision.'

    Anyone who does not understand that is simply being obtuse. They're the types of people that the hucksters of the world -- like a Madoff -- love to do business with and profit from.

    Add: The key phrase is 'risk-equivalent'.
  • Reply 59 of 85
    newbeenewbee Posts: 2,055member
    Quote:

    Originally Posted by dasanman69 View Post





    You're going to enjoy reading this then.



    http://www.fool.com/investing/general/2013/11/14/stupid-things-finance-people-say.aspx

    Thanks for that. Good humour always is "worthwhile" reading. I give you 99 out of 100 ... one very small deduction for the  "a mortgage is renting money from a bank" which wasn't your quote, was still funny, but borrowing is more accurate. Still, you made my day. Peace and out ... supper beckons.

  • Reply 60 of 85
    dasanman69dasanman69 Posts: 13,002member
    newbee wrote: »
    Thanks for that. Good humour always is "worthwhile" reading. I give you 99 out of 100 ... one very small deduction for the  "a mortgage is renting money from a bank" which wasn't your quote, was still funny, but borrowing is more accurate. Still, you made my day. Peace and out ... supper beckons.

    He worded it wrong but the bank is technically the owner of a house until the mortgage is paid off.
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