Can we thank “Trump’s favorite tycoon” for Apple’s accelerated stock buybacks?
Reading about his “failed raid on Washington” in the current New Yorker, I’m reminded of Carl Icahn’s run on Apple.
Icahn, who quit his position as a Trump advisor last week, is portrayed in Patrick Radden Keefe’s profile as a “germophobic, detached, relatively loveless man,” who made his billions running a high-end protection racket.
“Carl’s dream in life is to have the only fire truck in town,” a contemporary told his biographer. “Then when your house is in flames, he can hold you up for every penny you have.”
His affair with Apple, you may recall, began four years ago with a tweet:
We currently have a large position in APPLE. We believe the company to be extremely undervalued. Spoke to Tim Cook today. More to come.
— Carl Icahn (@Carl_C_Icahn) August 13, 2013
Long story short, Icahn purchased a total of 52,760,848 Apple shares while leaning on Tim Cook to accelerate Apple’s stock buyback. Cook had dinner with Icahn and heard him out. The stock, which had hit rock bottom, began to recover. Icahn cleared $2 billion in profit before announcing, live on CNBC, that he had dumped his holdings. As I wrote the next day:
Icahn got into the stock to pressure Apple into releasing some of its billions of overseas cash to shareholders. He got his share and left. Good riddance.
The twist in the New Yorker piece about Icahn and Trump comes toward the end.
“Icahn had spent the second half of 2016 complaining bitterly about [his energy company’s] obligation to buy RINs [ethanol credits], Keefe writes. “But… in April 2017 it emerged that the company had actually been selling them. This was extremely unusual.”
“To my knowledge,” a SUNY professor told Keefe, “this is the first time you had someone taking a short position in the RIN market.”
Below: Apple share price in the Icahn years:
And here’s Icahn dumping his Apple shares on CNBC, which showed the stock falling as he spoke.
Ironically, Apple investors who bought and held Apple did better than the corporate raider who came and went. Here’s what’s happened to Apple after Icahn cashed out:
CORRECTION: Apple’s board began its stock buyback program in April 2012, before Icahn’s 2013 tweet, not after as an earlier version of this story implied. The board accelerated the buybacks in April 2015, expanding Apple’s capital return program to a massive $200 billion.