Icahn Boosts Stake in ‘Overcapitalized’ Apple by Another $500 Million

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Carl Icahn, Herbalife, Netflix

Billionaire investor Carl Icahn revealed in a tweet on Thursday that he has purchased another $500 million of Apple (NASDAQ:AAPL) shares today, making his total investment in the California-based company about $3.6 billion. The activist investor also continued his crusade to convince Apple to return more cash to shareholders in an open letter to investors that was filed with the Securities and Exchange Commission.

Icahn’s letter outlined the reasons why he believes Apple investors should vote for his Proposal No. 10 that requests “that Apple commit to completing not less than $50 billion of share repurchases during Apple’s fiscal year ending September 27, 2014 (and increase the amount authorized for share repurchases under its Capital Return Program accordingly.)”

In the letter, Icahn chastised Apple’s directors for “performing a great disservice to the owners” by not expanding the company’s share repurchase program. Although he noted that Apple has already implemented “the largest share repurchase authorization in history,” he argued that, “This share repurchase authorization can and should be even larger, and effectuating that for the benefit of all of the company’s shareholders is the sole intention of our proposal.”

Icahn pointed out that the S&P 500’s price-to-earnings multiple is 71 percent above Apple’s and if the company were valued at the same multiple, its share price would be $840. He also noted that Apple “had $130 billion of net cash as of September 28, 2013 and that consensus earnings are expected to be almost $40 billion next year.” Based on the size of the company’s cash hoard and its potential for “opportunity that stems from new products in new categories,” Icahn called Apple “the most overcapitalized company in corporate history.”

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