Billionaire activist investor Carl Icahn, fresh off of his PayPal/eBay split victory, penned an open letter to Apple CEO Tim Cook Thursday, urging the consumer electronics giant to buy back more shares that he says are undervalued and easily worth twice their trading amount.
The often abrasive Icahn made sure to praise the operational gains made by Cook and his team, but quickly made his share repurchasing initiative clear.
Icahn wrote in the letter:
To be totally clear, this letter is in no way intended as a criticism of you as CEO, nor is it intended to be critical of anything you or your team are doing from an operational perspective at Apple. Quite to the contrary, we could not be more supportive of you and your team, and of the excellent work being done at Apple, a company that continues to change the world through technological innovation.
Given the earnings growth we forecast for Apple, we continue to think that the market misunderstands and dramatically undervalues Apple and (2) the excess liquidity the company continues to hold on its balance sheet affords the company an amazing opportunity to take further advantage of this valuation disconnect by accelerating share repurchases.
According to Icahn's valuation analysis, Apple should trade at $203 per share today, instead of around the roughly $102 per-share level it has been hovering. But Icahn said that the undervaluation anomaly would soon disappear, hence the urgency for the repurchase.
Icahn holds approximately 53 million Apple shares with Icahn Enterprises L.P., and this isn't the first time the outspoken investor nudged Apple down the repurchasing route.
In February, Icahn made it clear that he wanted Apple to repurchase an additional $50 billion of its own shares by the end of September, over and above the $60 billion that the company has already committed to. He eventually backed off of that proposal.