Support the Wall Street Examiner! Choose your level of support to receive a free proprietary report as my thanks. Click the button below to see your options. Become a Patron!

Surrender on Apple Stock Buyback a Rare Loss for Carl Icahn – Money Morning

This is a syndicated repost courtesy of Money Morning. To view original, click here. Reposted with permission.

This doesn’t happen very often.

Liquidity moves markets!

Follow the money. Find the profits! 

Carl Icahn has been foiled in one of his activist investing ploys, and by none other than Apple Inc. (Nasdaq: AAPL).

Icahn’s bid for an Apple stock buyback worth $50 billion ran aground today (Monday) when an influential proxy voting service, Institutional Shareholder Services Inc. (ISS), sided with Apple.

Icahn’s nonbinding advisory resolution for the huge Apple stock buyback was one of 11 proposals to be voted on at the Feb. 28 annual shareholders meeting.

Apple had already recommended that shareholders vote against it, but the ISS report was a big hint that Icahn wasn’t going to get a lot of support elsewhere, either.

“While the board has failed to articulate a strategy for addressing its long-term capital needs, it has returned the bulk of its U.S.-generated cash to shareholders,” ISS, a subsidiary of MSCI Inc. (NYSE: MSCI), said in its report. “The board’s latitude should not be constricted by a shareholder resolution that would micromanage the company’s capital allocation.”

ISS added that it would prefer to see Apple focus more on products than what it should or should not do with its cash reserves, which remain bloated at about $145 billion.

That, along with ongoing resistance from some other major Apple shareholders like Egan-Jones, another proxy advisory firm, was enough to get the usually stubborn Icahn to cry uncle.

On Monday the activist investor tried to put the best spin on his retreat, noting in a letter to Apple shareholders that the company already had repurchased $40 billion of its own stock in the past year, and $14 billion worth just since Apple reported earnings on Jan. 28.

“We see no reason to persist with our nonbinding proposal, especially when the company is already so close to fulfilling our requested repurchase target,” Icahn wrote.

Wall Street was apparently relieved that the months-long battle was over, sending the Apple stock price up 1.79% to $528.99.

Note: The Fed’s 2014 taper means volatility lies ahead. But there’s still a way to find profits in a volatile market – just start with this strategy…

Icahn began his quest to ramp up the Apple share buybacks last summer. In addition to sending out numerous tweets as he accumulated Apple shares, Icahn met with Apple Chief Executive Officer Tim Cook and in October published a letter to Cook describing the details of his plan.

Cook, for his part, maintained a polite but firm resistance. That and the unusually large amount of Apple stock buybacks that Icahn was demanding put off potential allies.

Icahn had kept up the pressure, and his own buying, through the New Year. Just a few weeks ago, he tweeted that he had purchased another $500,000 worth of AAPL, raising his stake in the company to $4 billion.

While having Icahn off its back is good for Apple, the company will still face shareholder restlessness if it fails to introduce at least one completely new major product this year.

In the long run, it will be new products aimed at new markets that will generate the profits needed to push Apple stock higher.

“Listen, I’d rather have the company come out with something new, something exciting,” said Breakout’s Jeff Macke. “If that happens, Icahn wins, I win, you win, everyone wins.”

Do you agree with @Carl_C_Icahn that #Apple needs to buy back more shares, or do you think he was just creating needless headaches for the company? Tell us on Twitter @moneymorning or Facebook.

Apple stock has recovered from last year’s lows, but Money Morning Defense and Tech Specialist Michael Robinson has reason to believe that the Apple stock price will double from here. Here’s why he’s so bullish on Apple right now…

Related Links:

The post Surrender on Apple Stock Buyback a Rare Loss for Carl Icahn appeared first on Money Morning – Only the News You Can Profit From.

Wall Street Examiner Disclosure: Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. No endorsement of such content is either expressed or implied by posting the content. All items published here are matters of information and opinion, and are neither intended as, nor should you construe it as, individual investment advice. Do your own due diligence when considering the offerings of information providers, or considering any investment.

Try Lee Adler's Technical Trader risk free for 90 days! Follow the money. Find the profits!

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.