Apple is currently sitting on a cash stockpile of $146.6 billion, the largest liquidity reserve of any company in the world. Some shareholders – Carl Icahn in particular – are unhappy and say that this cash should be put to good use. Apple share price has declined around 14% over the last year and by Icahn’s reasoning, the best use of the cash is to initiate a huge share buyback program. In other words now that he has a significant shareholding in Apple, he wants the stock price to go up.
Earlier on August 13, 2013 Carl Icahn tweeted that he had dinner with Apple CEO, Tim Cook, and he expressed his opinion for a larger share buyback. It was right about this time that he revealed that he had taken a large position in the company.
This didn’t go down well with Bill Gross aka Mr. Bond, manager of the $250 billion dollar Pimco Total Return Fund (PTTAX). He then tweeted activist investor Carl Icahn on October 24, 2013 and the tone of his message was clear. He insisted that Icahn leave Apple alone, and that if he (Icahn) was so smart, he should be like Bill Gates and do something for the people instead of just for himself.
Apparently he felt that he was setting himself up for a fall so a few hours later he tweeted again and said that he himself should probably be doing more of the same, and help people.
It is surprising to see the two billionaires duking it out on Twitter and we are pretty sure this is not the last of it. If Icahn holds true to tradition he won’t back off that easily and everyone will now wait to see how he reacts to Gross’s advice.
Meanwhile Tim Cook is silent on the issue but he will have to respond to Icahn’s arm-twisting one way or the other. It’s a classical Mexican stand-off and no one wants to shoot first.