Apple Inc. (NASDAQ:AAPL) Chief Executive Officer Tim Cook is apparently being swayed by activist investor Carl Icahn’s view. Icahn just tweeted that Apple will be doing a share buyback and that he will be discussing the size of that buyback with Cook in September.
Spoke to Tim. Planning dinner in September. Tim believes in buyback and is doing one. What will be discussed is magnitude.Mohnish Pabrai’s Lessons From Buffett, Munger And Life
Earlier this month, value investor Mohnish Pabrai took part in a Q&A session with William & Mary College students. Q3 2021 hedge fund letters, conferences and more Throughout the discussion, the hedge fund manager covered a range of topics, talking about his thoughts on valuation models, the key lessons every investor should know, and how Read More
— Carl Icahn (@Carl_C_Icahn) August 22, 2013
“Spoke to Tim,” Icahn tweeted. “Planning dinner in September. Tim believes in buyback and is doing one. What will be discussed is magnitude.”
Trading on Apple halted
Icahn’s latest tweet was posted before trading on shares of Apple Inc. (NASDAQ:AAPL) resumed at the NASDAQ. The exchange halted trading on all stocks for about three hours on Thursday, citing a technical problem. Traders expected to see pent-up demand as soon as trading resumed, especially on popular stocks like Apple. No doubt there were plenty of investors just itching to trade some Apple shares in the wake of Icahn’s tweet today.
His tweet earlier this month was a significant market mover for Apple Inc. (NASDAQ:AAPL), and it will likely be even more significant in the minutes leading up to the end of the trading day.
Since Icahn tweeted that he was talking with Cook about increasing share buybacks, analysts at virtually every major firm have weighed in. There’s discussion not only about whether Apple Inc. (NASDAQ:AAPL) can increase share buybacks but also whether it should. RBC Capital analysts said this week that the company could almost double its $60 billion share buyback.
Icahn told Reuters last week that he believed Apple could buy back $150 billion in shares right now by borrowing funds at a 3 percent interest rate. Deutsche Bank analysts said they thought a share buyback would boost Apple Inc. (NASDAQ:AAPL)’s earnings per share.
Some have pointed out that if Icahn is trying to push Apple shares upward, a share buyback isn’t the way to do it. Historically, share buybacks haven’t always been that helpful in terms of listing stock prices, specifically for Apple and its competitor Microsoft Corporation (NASDAQ:MSFT).