AAPL Stock Buyback Plan May Not Be What It Seems

COMMENTARY — It’s the morning after for the Apple (AAPL) buyback stock proposal. The business press woke up Thursday with some questions about billionaire Carl Icahn’s meeting with Apple CEO Tim Cook about a possible large-scale buyback to support stock prices.

As The Inquisitr reported Wednesday, Carl Icahn shipped some tweets claiming that he met with Apple CEO Tim Cook to discuss the buyback.

As a result, the stock moved upward by $17 billion, information that Icahn also shared in a gloating follow-up tweet.

You can read the whole report right here. But the short version is that there is probably very little doubt that the stock soared in response to the billionaire’s tweets.

Considering Icahn himself acknowledged that he has a large position in Apple, he benefited a great deal financially. An actual buyback would benefit him even more, since he has reportedly bought $1 billion in AAPL stock just in the past month.

Thing is, there are ethical and practical questions here.

I seem to be the only person much bothered by the fact that someone can manipulate stock prices in their favor by sending out tweets. So I’ll skip the ethics complaint and move on to the practical considerations.

A Bloomberg report said that stock buyback programs really don’t do much to support tech company stock. “The cost of the buybacks rarely is matched by corresponding increases in market value,” Adam Satariano wrote.

Their analysis of six tech company buybacks showed that companies increased in value if they put out new products that got people excited. Buybacks didn’t really earn out.

Still, apparently there are some pretty smart guys out there betting that the buyback will happen.

In a Wednesday regulatory filing, second billionaire George Soros disclosed that he too recently placed a large bet on AAPL. True, he doesn’t have anywhere near as large a slice of Apple as Icahn.

But ABC News said Soros has more than doubled the number of AAPL shares he holds since March, for a total holding of about $33 million.

There’s an old saying that when elephants contend, the grass gets trampled. Billionaires will almost certainly benefit from the talk about the AAPL stock buyback plan. I’m not so sure about the little guy.

But with AAPL at almost $500 a share at closing bell on Wednesday, maybe Apple isn’t a play for the little guy anyway.

[AAPL logo via iStore Guatemala via Flickr, Creative Commons]