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The secret behind Carl Icahn’s Apple stake

8/14/2013

As many of you know who read this blog, I told my clients to sell Apple all during the early part of 2013. And then in May, I said the bottom was in. And I set a target north of $500. This call was well documented by Fortune Magazine and CNN Money. When I said the bottom was in Apple was trading $420. Today, it’s $496.

Now, back in May, I said that hedge funds would be the buyers of Apple’s stock. I said, “Here is the catalyst, Tim Cook the CEO of Apple, for the first time has come out and lobbied for Apple verbally in the public domain. This is a sign of leadership major hedge funds have been waiting for.”

And what did we hear yesterday? Only that the biggest and best hedge fund investor in the world, Carl Icahn, has taken a sizeable position in Apple.

Now, here’s where it gets better. You’ll find no shortage of people telling you about Icahn’s Apple stake today. But what people don’t know is WHY he’s in Apple. I’ll tell you. Icahn bought Apple because he thought the stock was undervalued and had bottomed, just like I did. BUT, he also wanted to protect his massive investment in Nuance (NUAN), the maker of Siri. See Mr. Icahn owns nearly 16% of Nuance, or an almost $1 billion dollar position. And he wanted to make sure that Apple not only kept Siri on the Iphone, but also, in my opinion, he wants Apple to buy Nuance.

Nuance is selling near a 2-year low. It’s extremely undervalued. And it could easily be acquired by Apple for just a blip on their balance sheet.

Apple has $43 billion in cash. Nuance currently has a market cap of $6.2 billion. So even if Apple acquired Nuance for a 33% premium or $10 billion (around $25 a share), it would still barely dent Apple’s cash position. This would mean great synergies for Apple to own Siri outright, which would increase gross margins on every Iphone they sell. But it would also give Mr. Icahn a big pay day in his Nuance shares.

So, how do I know all of this? Well, for one, apparently I’m the top Apple analyst around — did anyone else tell you the bottom was in in Apple in May, and subsequently give you the roadmap to a 20% return in just three months?

Also, I happen to have studied billionaire investors and top performing hedge funds for over 15-years.

And from this research, I have built what I think is the best investing process on the planet. And with the reach of the internet, I no longer have to sell my research strictly to institutions, dealing with the stiffs at big pension funds. I can share it with average investors too. And I do so through my premium stock picking research service called The Billionaires Portfolio.

The Billionaires Portfolio is the only service in the world where the average person can invest along side the the world’s greatest hedge funds and billionaire investors. And it works! In the past three months, my subscribers have owned a stock that was acquired for a 90% premium in one day. And another that was acquired that resulted in a 70% gain in less than three weeks.

If you would like to learn more about my Billionaires Portfolio service, please click here.

William Meade
President of The Billionaires Portfolio
www.billionairesportfolio.com

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