
Apple’s loudest activist investor just dumped his stake - Doolwind
http://techcrunch.com/2016/04/28/apples-loudest-activist-investor-just-dumped-his-stake/
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nodesocket
I find it a bit ridiculous Carl Icahn can go on "Power Lunch" on CNBC, speak
for a few minutes, and cause investors to go into a selling frenzy (not only
AAPL, but the entire market NASDAQ and DOW was affected).

Securities are so easily multiplated and affected by CNBC and their
interviews, it is a bit scary. Perhaps even more scary are reporters who
basically write opinion pieces and affect security prices.

Looking on Carl's twitter
([https://twitter.com/Carl_C_Icahn/status/725717908056330241](https://twitter.com/Carl_C_Icahn/status/725717908056330241))
he even said he was going on "Power Lunch" before he did. Of course it would
be hard to know what news he was going to deliver, but you have to think some
people "in the know" had an idea and made some money today.

~~~
Benjammer
I mean, part of the entire point of the stock market is that it operates on
investor confidence; these kind of effects happen all the time from many
different causes. If this kind of thing scares you, it kind of seems like the
whole stock market itself would scare you.

Heck, there's a separate sub-sector of the financial industry devoted to "dark
equity" and hiding the actions of influential actors in order to not produce
these effects.

~~~
duskwuff
What's scary about it to me is simply the amplifying effect of celebrity
investors. Lots of individual investors making individually irrational
decisions can at least all cancel each other out, but when one irrational
decision can drive thousands of other investors to all make that same decision
at the same time, that's another matter.

~~~
Benjammer
Do you think this effect has any more drastic consequences than the average
celebrity endorsement of any product in any other industry?

~~~
BookmarkSaver
Yes, because a bunch of people deciding that they need a GoPro that they'll
never use or drop extra money on a fashion line that has some celebrity's name
on it isn't a big deal. That is money that is gonna be spent anyway.

Sending irrational ripples through the stock market affects things like
interest rates, retirements, and employment in a somewhat widespread manner.

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bydo
Bad press, but good riddance. I can't imagine Apple has much use for out-of-
touch "activist" investors clamoring for short term growth and dividends while
complaining about their lack of "innovative" new products like … television
sets.

~~~
wvenable
Ultimately what is Apple going to do with that 230 billion? Sitting on a hoard
of cash is no benefit to the company or investors.

~~~
Analemma_
Despite their current dominance, Apple knows that downward swings of fate come
fast and hard in the tech industry. Consider that 10 years ago, the biggest
names in mobile were Palm, Nokia and Blackberry, and now they're either gone
or hollow shells. You can think farther back and find plenty more examples of
unassailable kings who went bust in a hurry. Then compare that to e.g.
Microsoft, who at one point looked doomed but managed to get relevant again by
using their huge cash pile to break into a capital-intensive business, which
they wouldn't've been able to do without it.

I imagine in this sector more than most there's a strong temptation to amass a
huge safety net so you can ride out getting "disrupted". As a leftist
Keynesian I don't particularly like it-- seeing all that money sitting there
doing nothing drives me crazy-- but I understand the motivation.

~~~
apr
In the big scheme of things all that money are not "sitting there doing
nothing". They are probably invested in some short term bonds and therefore
they make some other capital expenditures possible somewhere in the overall
economy.

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matwood
"Just?" He finished his position in February. It almost feels like he sees
stock pressure and is piling on to get back in at a lower price.

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partiallypro
I wonder how many people here read/looked at the interview. Icahn said he was
interested in buying Apple again, but thinks there are market risks and that
the Chinese government seems keen on interfering with American tech companies.
He said that he has faith in Apple as a company, just not the stock at its
current level in this environment.

All very sensible reasons to get out of a position if you think it may be dead
money for a few years. He made millions/billions from his position (he did the
same in Netflix and sold that entire position.) Icahn is no dummy. Those
calling "activist" investors as all Gordon Gekko types, looking to gut
companies, are living in fantasy. In his interview Icahn actually calls out
CEOs for running companies into the ground and using golden parachutes.

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r00fus
Good riddance. Apple literally can't issue enough dividends or buyback enough
of their stock to not grow their cash stockpile.

Why shouldn't Apple just go private?

~~~
mikeyouse
How exactly would Apple go private? Someone would have to show up with ~$600B
in cash to buy all outstanding shares at a decent premium.

~~~
misnome
> How exactly would Apple go private?

Slowly, over time? It's not as though $600B cash is exactly out of reach for
Apple.

~~~
padmanabhan01
//Slowly, over time? It's not as though $600B cash is exactly out of reach for
Apple

You do know that the cash Apple has in its balance sheet belongs to its
shareholders and that Apple can't use that to buy itself and go private?

~~~
brianbreslin
Actually companies do this all the time. Buybacks are often used to prop up
the price of shares in short term, or reduce dividend obligations. Apple could
borrow the $600B at dirt cheap rates and go private asap. 20 year loan
repayment. might be cheaper than trickling itself back to private.

~~~
padmanabhan01
//Apple could borrow the $600B at dirt cheap rates and go private asap

Ok, so you mean Apple (the public company) borrows money, and then goes
private. Now who would that private entity be? And which entity would be
repaying that loan now since Apple (the public company) that borrowed money
would no longer be an entity as it went private.. care to clarify?

~~~
gnoway
Presumably it would be an ownership group like e.g. Tim Cook + some other
people borrowing the money, and/or they'd partner with a P/E firm. Isn't that
what Dell did a couple of years ago?

~~~
dpark
Sure. If Tim Cook and "some other people" could borrow 600 billion dollars,
they could buy Apple. Turns out that it's really hard to get a loan for that
amount though.

And regardless this has nothing to do with Apple running a stock buyback.

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coldcode
People go nuts over Facebook selling, again, $1/month per subscriber. Their
entire income is 50% of Apple's profit. People go nuts over Amazon finally
profiting 500M in a quarter which is 1/20th of Apple. If Facebook got $1/month
for every living person on earth they still wouldn't get close to Apple's non-
hardware income ($10B). Maybe Carl can go irritate them for a while.

~~~
mcphage
> People go nuts over Amazon finally profiting 500M in a quarter which is
> 1/20th of Apple.

Amazon profiting 500M is interesting not because they previously _couldn 't_,
but that they always _chose not to_ , and so people are wondering the cause
for the change.

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abhi3
Interesting insight, Apple's market cap is $600 B while it has ~$250 B
cash/equivalent.

So net of all their businesses valuation is more like $400 Billion? Less than
Google and Microsoft?

Anyway I don't think it is unfair for an investor to want company to pay
dividends _when_ it has no good use for that cash. Remember, Carl Icahn was
the guy who spun off paypal from the sinking ship that is ebay.

~~~
abritinthebay
> when it has no good use for that cash

Except Apple _does_ have use of that cash. It's just not the short-term
thinking that Wall Street and cheap get-rich-quick investors _like_.

~~~
abhi3
Good use for 250 billion dollars?

What is it that Apple needs 250 billion for that google can do for 70 Billion
(still too much) or Tesla can do at 1.5 Billion (more appropriate)

~~~
mkehrt
There was that time Apple bought 1.25 billion dollars worth of flash [1]. And
it's later made similar payments for similar things [2,3]. 220 billion in the
bank is pretty excessive, but 1.5 billion is way too low for the sorts of
things they want to do.

[1]
[http://appleinsider.com/articles/05/11/21/apple_to_prepay_12...](http://appleinsider.com/articles/05/11/21/apple_to_prepay_125b_for_ipod_flash_memory.html)
[2]
[http://appleinsider.com/articles/09/07/21/apple_prepays_for_...](http://appleinsider.com/articles/09/07/21/apple_prepays_for_a_half_billion_dollars_in_flash_memory)
[3] [http://arstechnica.com/apple/2011/12/apple-lays-down-
half-a-...](http://arstechnica.com/apple/2011/12/apple-lays-down-half-a-
billion-to-secure-its-flash-storage-future/)

~~~
abhi3
I meant Tesla's 1.5B is appropriate for their scale. Apple would obviously
need more but not 250 Billion.

~~~
mkehrt
Ah, reasonable.

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ksec
I have been asking this question for a long time, and yet fail to find or get
an answer that i could understand.

Why did Apple choose to buy back stocks? Was there any need for it?

What has buying back stocks and wipe them off ( instead of keeping them )
benefited to me as a shareholder? Some would argue without the buyback, their
share prices would have dropped even more, but that would at least create a
chance for me buy a more for what i think is of value. Now as far as i have
concern, they have merely make the stock a lot less volatile with NO / little
dividends.

What has buying back stocks and wipe them off ( instead of keeping them )
benefited to Apple as a company? Those money could have been used somewhere
else to create EVEN more VALUE instead of buying back?

~~~
nopzor
Buying back stock decreasing the amount of outstanding shares. Decreasing the
amount of outstanding shares means each share has more share of the earnings
(earnings per share).

Buying back stock does not benefit Apple as a company, but if the shares are
undervalued it benefits you as a shareholder.

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blabla_blublu
Good riddance. He's this noise box who keeps clamoring all the time.

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jbob2000
I dunno, seems pretty reasonable to want a dividend payment. Apple is just
sitting on a mountain of money and not doing anything with it, why keep all
that cash out of the market?

~~~
davidw
How much of it is actually in the US? That might be a factor.

~~~
coldcode
Most of it isn't.

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ageofwant
I always wondered what the effect would be if all stock trade transactions has
a minimum 24h ownership requirement. You MUST hold a stock/option/hedge for at
least 24h before trading it off. I picked the 24h period rather arbitrarily.

Would anyone who actually knows anything about this care to enlighten me ?

~~~
nopzor
Liquidity would go down. Spread would be up. Market makers would have a hard
time.

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spriggan3
With all the cash they have Apple could go private, what is the rational for
staying public?

~~~
mcphage
What's the rationale for going private?

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draw_down
Uh oh, they're doomed! DOOMED!!!

~~~
orionblastar
There used to be an Apple Doomsday Clock website in the 1990s.

Geekforce saved some of the pages but recently got rid of them.

It took the Think Different campain and made a mockery of it showing pictures
of Hitler, Stalin, Mao and others. At times it was funny at other times it was
offensive.

But they would talk about how Apple was doomed. Until Steve Jobs came back and
fixed the company and then they were pro-Apple.

But it was a good satire and sarcasm site like The Onion is today.

