Billionaire hedge fund manager, investor and shareholder activist Carl Icahn is at it again. On Tuesday, April 28th, Icahn fired off his first tweet in the last five weeks: “$AAPL is still undervalued and misunderstood. Expect to put out another in-depth report within two weeks.”
The tweet of course provoked a firestorm of responses, most, but not all, supporting his pro-Apple position. Of note, Icahn has a significant stake in Apple and has been pushing the tech titan to take additional steps to increase shareholder value for some time now.
$AAPL is still undervalued and misunderstood. Expect to put out another in-depth report within two weeks.
— Carl Icahn (@Carl_C_Icahn) April 28, 2015
Icahn and Apple
Carl Icahn has been invested in Apple since at least early 2014, and has added to his position several times. Icahn said not long ago he had both mathematical and fundamental reasons why he remains committed to owning 53 million shares of Apple (currently worth close to $7 billion).
Icahn has not had much to say about Apple for almost a month a half now, ever since CEO Tim Cook agreed to increase share buybacks.
As ValueWalk reported back in February, Icahn believes the iPhone maker should be valued at $216 a share. He argues the discrepancy in P/E between Apple and the market indices is ”totally irrational,” and that the markets are “somehow missing a very basic principle of valuation.”
Icahn continued to say: “When a company’s future earnings are expected to grow at a much faster rate than that of the S&P 500, the market should value that company at a higher P/E multiple.”
Moreover, he believes Apple’s EPS will grow around 20% a year in 2016 and 2017. And if the iPhone maker launched a TV next year, Icahn said you could see a 31% annual EPS growth from the firm.
Icahn says that Apple should be valued at $216 per share (ie, a P/E of at least 20X and a net cash of $22 per share). Icahn concluded his February report by saying: “This is not a future price target. $216 is what we think Apple is worth today,”
