Apple-AAPL-500

Following comments from billionaire investor Carl Icahn that he had taken a “large position” in Apple and discussed a larger buyback with Apple CEO Tim Cook, Apple’s stock experienced a new six-month high of over $488 per share. Today, AAPL continues to climb and has passed the $500 mark for the first time in nearly eight months since January 23rd.

In an interview with The Wall Street Journal yesterday, Icahn noted that he expects Apple shares will soon rise above $600 and explained his proposal for increasing the stock buyback:

“This is a no-brainer to go buy stock in a company that can go borrow” at a low rate, Mr. Icahn said in an interview. “Buy the company here and even without earnings growth, we think it ought to be worth $625,” he said, referring to the stock price, which closed Tuesday at $489.57, having risen 5% on the news of Mr. Icahn’s investment.

Mr. Icahn’s thesis rests on Apple borrowing at about a 3% interest rate and buying back shares right now, likely at around $525 a piece. A stock buyback can increase earnings per share by reducing the number of shares outstanding.

While Icahn didn’t provide any financial details, WSJ adds that sources say his stake in Apple is now worth over $1.5 billion.

Apple responded to yesterday’s news by saying that it appreciates “the interest and investment of all our shareholders” and that “Tim had a very positive conversation with Mr. Icahn today.”

Apple’s major multi-billion-dollar stock buy-back program launched earlier this year along with accelerated stock repurchasing suggested Apple expected its stock to climb, and some speculate that an even larger buyback proposed by Icahn could increase the AAPL stock value even further.

Piper Jaffray Apple analyst Gene Munster told WSJ that Icahn’s investment “serves as an acknowledgment that better things could be coming from Apple over the next six months, which should help raise the company’s stock.” Also potentially helping Apple stock is the lead up to new products this fall, specifically new iPhone models, expected at an event reportedly scheduled for September 10th.

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4 Responses to “AAPL hits $500 for the first time since January following Icahn investment”

  1. It’s sad how easily the stock can be inflated and deflated.

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  2. I see on my iPhone notification center is 502.50.

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  3. ted4bz says:

    Carl was my boss at TWA. He bought TWA in a fire sale for a few million and sold it a few years later for more than a billion. But now TWA no longer exist. I cant say it is his fault that TWA no longer exist though. TWA just didn’t have the smart people running it after he was done with it. He did a few smart things like he purchased a few million dollars of shares in fuel company that fueled TWA aircraft Texaco. So he got free fuel and made a huge profit, smart as smart as can be. After he sold TWA he no longer needed Texaco so he sold his shares in Texaco and made a few more billions.

    I was behind TWA then now I am behind Apple, why is Carl following me around? LOL! Carl did very well for himself, smart former medical student, smart as smart can be. I am sure he will do very well for himself investing in Apple. For Apple thats another story. When Carl left TWA all that was necessary for TWA to exist was a smart person that didn’t happen. I think the fate of Apple is at stake it too doesn’t have the smart person it necessary to drive the huge engines that powers it. I think the gloom that looms over Apple is about to devoured its huge success. Tim Cook will not do. It is best that the board put a posy in his pocket and send him merrily on his way. Jobs got everything right but got this one wrong, how could this be? I am sure Carl Icahn will do much better job running Apple or he will do well for himself controlling the stocks. We’ll see.

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