Billionaire investor Carl Icahn said Thursday that he has spoken to Apple‘s (AAPL) Chief Executive Officer Tim Cook, and will be having dinner with him to discuss the “magnitude” of a stock buyback.
“Spoke to Tim. Planning dinner in September. Tim believes in buyback and is doing one. What will be discussed is magnitude,” Icahn tweeted, without elaborating.
The activist investor, who has bought a large long position in Apple valued at a reported $1.5 billion, is pushing the iPhone maker to return more cash to shareholders by expanding its program of share buybacks. This despite a $100 billion investor payout — already one of the Street’s largest — Cook has already committed in dividends and buybacks through fiscal 2015.
After disclosing his Apple stake last week by saying the tech giant is “significantly undervalued,” Icahn said Apple’s stock should trade at $700 a share — and the company should use debt to buy back more shares.
”Apple has the ability to do a $150 billion buyback now by borrowing funds at 3%,” the hedge fund billionaire said in a recent interview with Reuters, noting the company could boost its stock value by using its “huge borrowing power, little relative debt and [the stock’s low multiple factor].” A buyback, he said, is a “no brainer.”
“If Apple does this now and earnings increase at only 10%, the stock – even keeping the same multiple currently – should trade at $700 a share,” he said.
Icahn told The Wall Street Journal last week that even without earnings growth, Apple “ought to be worth $625.”
Apple shares, which printed the tape as high as $705 last September, rose less than 1% to $502.96 at the close in New York.