Icahn: Apple's New Money Maker

NEW YORK ( TheStreet) -- Was it a coincidence that hedge fund manager Carl Icahn announced his rather large position in Apple ( AAPL), right as the stock was attempting to tackle its 200-day moving average?

I think not.

Icahn seems to have been in the news more than any other fund manager this year. He has, yet again, made headlines when he told the financial world via Twitter that his firm currently has a "large position" in Apple. Bloomberg News has reported that the position is in excess of $1 billion.

Before Icahn's tweet at 2:21 p.m. EDT, Apple had been trading fairly well on the day, up roughly $8 per share, or 1.75%, give or take a few basis points.

Within 4 minutes, at 2:25 p.m. EDT, shares of Apple had nearly tacked on another $10, ultimately closing at $489.57, up 4.75% on what turned out to be the best trading day for the stock this year. The tweet added about $10 billion in market cap.

Before today, Apple had already rallied more than 10% in the past month, helped along by a fairly decent earnings report and positive guidance in July. Aiding in the more recent move is the upcoming September 10 event, which is when many are expecting to see the company's new smartphone.

Again, it's no coincidence that Icahn chose Tuesday of all days to announce his presence. After all, sources have said that he's been accumulating the stock for the past four weeks now, meaning he could have made this announcement at many different points, both past and future.

While they could be wrong, I would have to think that it was no accident that the stock closed 25 points above the 200-day moving average, typically seen as longer-term resistance.

Icahn also noted that he had a conversation with the CEO Tim Cook, discussing a potential plan to boost the share buyback program. For those who are unaware, the repurchasing plan already stands at a mind-boggling $60 billion.

So what does this mean for shareholders? Although it's a little too early to tell, it is a positive step in the right direction. I would expect that traders and investors will begin chasing the stock and that $500 per share by the end of the week wouldn't be out of the question.

The stock could get especially extended if the institutional investors were caught off guard. It's easier for them to accumulate a high-profile stock like Apple when it has been stuck in the mud like it has for most of 2013. But this rapid rise over the last week, and specifically on Tuesday, could force a lot of investors to chase the name who wanted to own it under $500.

In all, I don't think Icahn can be the type of "bully" with Apple, as he is toward other companies. This isn't Dell ( DELL) and he's not going to be making any takeover bids. While he's now proved he can move a mega-cap stock like Apple, I think his influences will be much less relevant than the public may be used to.

In any regard, he's in the stock to make money, something that should encourage shareholders. If Apple goes the way his other plays have gone this year, investors will be very happy.

-- Written by Bret Kenwell in Petoskey, Mich.

At the time of publication, Kenwell was long AAPL in any stocks mentioned.
Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter. Focuses on short-to-intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.

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