Bill Gross, manager of the world’s largest mutual fund, said fellow billionaire investor Carl Icahn should stop pushing Apple Inc. (AAPL:US) for additional share buybacks.
“Icahn should leave Apple alone and spend more time like Bill Gates,” Gross, who runs the $250 billion Pimco Total Return Fund (PTTRX:US) at Pacific Investment Management Co. in Newport Beach, California, wrote in a message on Twitter today. “If Icahn’s so smart, use it to help people not yourself.”
Icahn, who has taken stakes and agitated for stockholder friendly changes at companies from Dell Inc. to Transocean Ltd. (RIG:US), said in a Bloomberg Television interview yesterday with Trish Regan that Apple should buy back $150 billion of shares and criticized the board for not acting to enhance value. In backing Apple’s management, Gross joins Warren Buffett, who has said that companies shouldn’t be run primarily to please shareholders who may then sell.
Icahn is ranked 34th on the Bloomberg Billionaires Index of the world’s richest people, with a net worth of $21 billion. In 2012, he pledged $200 million to the Mount Sinai School of Medicine, the biggest donation ever given to the New York City teaching hospital. He’s also endowed five charter schools in the city and has signed Buffett’s and Gates’s Giving Pledge, which encourages the world’s richest to give the majority of their wealth to charity.
Gross’s personal wealth is estimated at $2 billion. The 69-year-old has endowed a foundation with $293 million in assets and raised money for Doctors Without Borders, a medical charity, by selling parts of his stamp collection. He gave $20 million to Cedars-Sinai Medical Center last year and $20 million to Mercy Ships, an international medical charity, in August.
Mark Porterfield, a spokesman for Pimco, confirmed the Twitter message was posted by Gross. He declined to comment on whether Gross has signed the giving pledge.
Gross’s Total Return Fund didn’t own any Apple bonds as of June 30, according to a regulatory filing. One of Pimco’s stock funds, EqS Pathfinder, had 23,059 shares of Apple as of June 30.
In a letter to Apple Chief Executive Officer Tim Cook published today, Icahn said he increased his holding in the company to 4.7 million shares worth $2.5 billion from 3.4 million shares in August, and added that he intends to buy more of the stock that he said is undervalued.
Icahn, 77, didn’t immediately respond to a phone message left with his office.
While Apple co-founder Steve Jobs resisted calls to return cash to shareholders, Cook has shown a willingness to meet investor demands. In February, hedge-fund manager David Einhorn called for Apple to give more cash back and later sued to get the company to increase shareholder returns. The move was opposed by two of the best-known advocates for shareholder rights, the California Public Employees’ Retirement System and Institutional Shareholder Services.
In April, the Cupertino, California-based iPhone maker increased its payout and boosted its stock repurchase plan. Apple had $146.6 billion in cash and investments at the end of June.
Buffett, in an interview on the CNBC television network broadcast this month, said he advised Apple a few years ago to use some of its cash to repurchase shares, though he doesn’t see a need for a larger share repurchase as demanded by Icahn.
“I do not think that companies should be run primarily to please Wall Street” and investors with a short-term perspective, Buffett said in the interview.
Investors who have weighed in on Apple include bond manager Jeffrey Gundlach, who runs the top performing DoubleLine Total Return Bond Fund. Last year, Gundlach told investors to bet against the shares before they started falling. During an interview on CNBC earlier this month, Gundlach said Apple was a “fairly safe” stock to own, yet doesn’t agree with people who say it’s a “no brainer” at $500 a share.
Apple gained 1.3 percent to $531.91 in New York. The stock is down 0.05 percent this year, compared with a 23 percent climb in the Standard & Poor’s 500 Index.
Icahn has clashed with other investors before. He engaged in a fight with Pershing Square Capital Management LP’s Bill Ackman over Herbalife Ltd. (HLF:US), a maker of nutritional supplements, and opposed Michael Dell’s leveraged buyout deal of Dell Inc.
“Bill Gross certainly has a right to his opinion,” Icahn said today in an interview on CNBC. “Theodore Roosevelt took on the whole establishment and was a very hated man.”
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