As promised yesterday, activist investor Carl Icahn has published an open letter to Apple CEO Tim Cook asking him to “present the Board our request for the company to make a tender offer, which would meaningfully accelerate and increase the magnitude of share repurchases.”
In the letter, which is entitled, “Sale: Apple Shares at Half Price”, Icahn emphasizes his position as Apple shareholder: he has approximately 53 million shares, and at $100 per share, he strongly believes that shares of AAPL stock are trading at half of their actual price.
Icahn says that his forecasted growth for fiscal year 2016 and 2017, alongside net cash value AAPL stock, is $203 per share today. From this perspective, Apple remains “dramatically undervalued”, and he is confident the Board agrees with this.
Given Apple’s “opportunistic” share repurchases, now is the time for a share repurchase, says Icahn, and the best way to do so is by making a tender offer. As a result of the repurchase plan, the remaining shareholders will profit from Apple’s future market growth, says Icahn.
You have said before that the company likes to be “opportunistic” when repurchasing shares and we appreciate that. With this letter we simply hope to express to you that now is a very opportunistic time to do so. We think a tender offer is simply a good method of conducting a large repurchase in an expedited timeframe, but the exact method and the exact size is not the key issue for us. We are simply asking you to help us convince the board to repurchase a lot more, and sooner. We feel compelled to do so because we forecast such impressive earnings growth over the next few years, and therefore we believe Apple is dramatically undervalued in today’s market, and the more shares repurchased now, the more each remaining shareholder will benefit from that earnings growth.
The whole letter can be read on the Shareholders Square Table website.