One day after he used Twitter to announce the purchase of another $500 million worth of Apple (AAPL) stock, Carl Icahn attacked the company in a lengthy open letter to his "fellow Apple shareholders" on Thursday afternoon.
"Given the degree to which Apple appears undervalued to us, we feel it's almost a waste of time to debate the point," wrote Icahn in his nearly 3,000 word note. The extreme activist proceeded to argue that Apple should capitalize on "advancements in miniaturization and continued improvements in Siri" to produce an extended list of products from wearable gadgets to televisions.
It was classic Icahn, humble-bragging about his massive profits since first tweeting about Apple last summer, even as he lectured the board for continuing to ignore the "biggest no-brainer" opportunities he's seen in "five decades of successful investing."
Icahn's got the chops, but after a full day of hyping his position on financial television the septuagenarian billionaire is testing the limits of his strange new mix of investment activism and online trolling.
“I don’t think it’s fishy,” says Hedgeye’s Keith McCullough in the attached video. “I think it’s what any rational player would do.” Icahn has billions of dollars in capital and invariably discloses his positions. He also has the wontons to take a stance against any other animal in the Wall Street jungle and win. Icahn is holding corporate America accountable and making billions doing it.
The Icahn-effect is punditry taken to the extreme. There’s nothing immoral or illegal about arguing a stock you hold is undervalued. Icahn saying Apple shares are a good buy is an opinion, not a command. Icahn is telling people what he really believes. He’d argue what he’s doing isn’t exploitation but giving tremendously valuable financial advice for free and having a blast doing it. Given that type of influence and platform McCullough or I would do more or less the same thing.
Of course even Carl Icahn is wrong sometimes and people taking his advice lose money. Yesterday Icahn briefly worked his magic on eBay (EBAY) which briefly hit a 52-week high in response to a forgettable quarter and Mr. Icahn’s involvement.
Ultimately what happened with eBay is why even the mighty Icahn’s ability to move stocks with a Tweet or rant will slowly fade. Jumping online to buy a stock when it’s up 5 or 10% because a billionaire is bullish is a dumb thing to do. The brutal truth is, people investing that way are like gamblers who hit on 18; the laws of natural selection are more efficient than regulations.