By now it's no secret that Carl Icahn made a whopping fortune in a 14 month hold on Netflix. Carl bought his shares beginning at $58 a share and sold for $328. He still owns about 75% of his total holdings in Netflix, he continued to buy as the price recovered from the $58/share on it's way to peaking out just below $400. So what does Carl Icahn do with the $800M profit from Netflix sale? He's continuing to invest in Apple and actively meeting with Tim Cook on how to make the stock grow. Icahn has no interest in guiding Cook on the product line or how Cook Markets Apple products. He continues to say, Cook and the team at Apple know what they are doing and he does not want to get in the way of their innovation. He is more concerned that the company doesn't know how to manage it's profits from those products. Icahn has suggested to Tim Cook he borrow $150B at currently low interest and buy back it's stock which will raise the earnings per share and boost the stock price. Icahn predicts that with that buyback, the current $525/share could jump to $1250 in a year. Combine that with a 4 to one split and 3 years of growth, reach $2000/share or $500/share after split. Icahn currently owns 4.7M shares of Apple and plans to continue to buy more. He says he will hold for a planned 3 years, then will begin to sell and hopes to reap a profit of $7B.
Note that Apple has already borrowed money to buy back about $75M in stock over the next 16 months. The buybacks this year have reduced the outstanding shares from 930M to 905M. Icahn said this is not fast enough based on the volume of cash being generated by company profits.
Icahn is right when it comes to money management. Apple has not demonstrated any bold moves to use the cash in any major acquisitions. It has a paltry low dividend. Yet the cash pile keeps building at 8 times the rate of the outflow. When Netflix was trading below $200 a share, Apple could have bought it and not noticed a blip on their books. Currently the cash at $160B is invested in low interest that Icahn is costing Apple Billions in growth.
Disclosure- I continue to trade Netflix and am long on Apple, trading around a core position.
Note that Apple has already borrowed money to buy back about $75M in stock over the next 16 months. The buybacks this year have reduced the outstanding shares from 930M to 905M. Icahn said this is not fast enough based on the volume of cash being generated by company profits.
Icahn is right when it comes to money management. Apple has not demonstrated any bold moves to use the cash in any major acquisitions. It has a paltry low dividend. Yet the cash pile keeps building at 8 times the rate of the outflow. When Netflix was trading below $200 a share, Apple could have bought it and not noticed a blip on their books. Currently the cash at $160B is invested in low interest that Icahn is costing Apple Billions in growth.
Disclosure- I continue to trade Netflix and am long on Apple, trading around a core position.
