Carl Icahn Takes On Apple, Tim Cook | CNBC

Summary

Highlights

• Carl Icahn writes to Apple CEO Tim Cook, urging a stock buyback while highlighting undervaluation. 📬
• Brett Icahn and David Schechter join Carl Icahn on CNBC to discuss Apple's growth potential. 📺
• Icahn compares Apple's market position to legendary companies like IBM, emphasizing its strategic dominance. 👑
• Despite market volatility, Icahn remains bullish on Apple's future, citing its innovation and customer loyalty. 📈
• Icahn addresses criticisms of his public corporate governance strategies, defending transparency. 🗣️

Key Takeaways

• Carl Icahn urges Apple to increase its stock buybacks amid undervaluation concerns. 📈
• Apple's robust ecosystem and unchallenged market stance highlighted by Icahn. 🍎
• Icahn compares Apple's potential to legendary companies such as IBM, stressing its strategic advantages. 🏆
• Market volatility and undervaluation are major concerns, but Icahn remains optimistic about Apple's future. 📊
• Icahn's instinct-based investment approach has historically led him to success. 🧠

Overview

Chapters

• 00:00 - 03:00: Introduction and Letter Discussion The chapter introduces the main topic of discussion, which is a letter from Carl Icahn to Apple CEO Tim Cook. Icahn urges Apple to buy back more stock, arguing that the company's shares should be valued at over $200. The chapter sets the stage for a discussion among financial experts Joe Terranova, John Najarian, and Josh Brown, as well as a guest appearance by Carl Icahn.
• 03:00 - 07:00: Carl Icahn's Perspective on Apple's Stock The chapter discusses Carl Icahn's views on Apple's stock, featuring a group discussion with Tim Cook and others on a network appearance. The chapter sets the stage for a conversation led by Scott, who brings a sense of management to the multiple speakers. Carl Icahn's repetitive interest in Apple's stock is compared to the timeless quote by Yogi Berra, suggesting a recurring pattern or theme in his investment strategy.
• 12:00 - 17:00: Reasoning Behind Public Communication The chapter titled 'Reasoning Behind Public Communication' starts with a reflection on a significant event about a year ago, specifically a letter sent to Apple requesting a substantial buyback. The motivation for following up with another letter is tied to the success of their investment in Apple, noting a 55% increase since they publicly recommended it to their followers. They express pride in Apple, describing it as one of the most exceptional companies of recent decades, and suggest that this is a point they elaborate on in the associated letter.
• 20:00 - 23:00: Market Concerns and Economic Outlook The chapter discusses the current market concerns and economic outlook, focusing particularly on the dominance of Apple in the mobile phone and iPad industry. It highlights that the competition cannot simply take market share from Apple; rather, the real concern is understanding the extent of Apple's reach and influence in the market.
• 23:00 - 28:00: eBay and PayPal Split Discussion eBay and PayPal Split Discussion - The discussion revolves around the strategic decision of eBay and PayPal to separate into two distinct companies. The conversation highlights the strengths in leadership, particularly referencing Tim Cook's successful creation of an integrated ecosystem. There is an emphasis on the perception of Apple as primarily a software rather than a hardware company. This perception is tied to their ability to continuously gain utility every time a phone is sold, suggesting a higher market valuation should be considered for such companies.
• 28:00 - 32:00: Netflix Investment Strategy In the chapter 'Netflix Investment Strategy,' the focus is on a guaranteed flow stemming from the idea that people do not often discard their phones. The speaker emphasizes respect for leadership, particularly acknowledging Tim for his excellent job performance. They commend the board for retaining Tim and fulfilling their responsibilities, although the primary discussion is not about corporate governance or dysfunction. Instead, it delves into how maintaining leadership contributes to the company's strategic success.
• 31:40 - 37:00: Conclusion and Final Remarks The chapter titled 'Conclusion and Final Remarks' involves a discussion on governance and financial expertise, particularly focusing on the situation with Apple. There's emphasis on the notion that while the speakers are knowledgeable about finance, they are not advising Apple directly on their actions. The dialogue suggests that Apple has a significant cash reserve of 135 billion, and there's a strategic suggestion to capitalize on the low prices in the market. The conversation appears to be an interview or a talk, where one of the speakers encourages another, Brett, to elaborate on the points discussed, hinting at a detailed exploration of the subject in prior discussions.

Carl Icahn Takes On Apple, Tim Cook | CNBC Transcription

• 00:00 - 00:30 I do want to however get to our top story today and that is the new letter from Carl icon to Apple CEO Tim Cook urging that company to buy back a lot more stock while making the case that shares should be trading at more than $200 saying the Market's simply getting it wrong I have Joe teranova a verus today with me John nerian is the co-founder of option monster he's here as well as is Josh Brown of rid Holtz wealth management all three on set with me I also want to welcome in Carl icon his Brett and David sheer who
• 00:30 - 01:00 collectively sent that letter to Tim Cook and who are making their first ever appearance as a trio on this network gentlemen it's great to have you yeah good to be here Scott I'm going to be uh I guess I'm going to be taking the title of traffic cop to a whole new level uh today with three folks on the phone that's a record for us so um thank you for being here it's good to have you um I do want to begin Carl with you first uh to quote the great Yogi Bara this is deja vu all over again why another
• 01:00 - 01:30 letter almost to a month a year ago that you sent the first letter to Apple asking for a massive buyback why another one well you know we're we're uh certainly proud of the investment in apple uh when we tweeted it it's up over 55% since we tweeted it to our followers about a year ago we believe it's one of the great companies literally of of of the last few decades um if you read the letter I
• 01:30 - 02:00 think you'll get the gist of it so we don't have to really go into Point by point but just I look at things very simply and and and just simply uh in in the greatest industry right now in the world which is really the mobile phone and the iPad uh you really can't compete uh with Apple so it's not the question of taking market share it's just a question of how far Apple
• 02:00 - 02:30 uh can go with this uh because they built this great ecosystem and I think as I say Tim Cook has done a great job doing that and and so basically you can't compete therefore we think it should have a much bigger multiple that it does because it really is a a software company not a hardware company and um every time they sell a phone Scott they have another uity they have
• 02:30 - 03:00 another flow that they guaranteed because people don't get rid of these phones and I think this is not realized and as a result uh we writing this letter because we're saying very respectfully because we really do believe Tim's done a great job and and we actually congratulate the board for keeping Tim and being involved and being responsible right but that's not the point this is not my usual corporate governance uh uh dysfunction talking about the dysfunction corporate
• 03:00 - 03:30 governance and therefore we're saying though that this is sort of our expertise as far as the finance goes and uh we're not presuming to tell them at all what to do about Apple but we say they have 135 billion and why not take advantage of what we going to be a very low price right Carl why don't you why why don't you grab a a a little drop of water there I I'll ask Brett um so if this is the case Brett as you guys lay out so thoroughly in this
• 03:30 - 04:00 letter why is the market getting it so wrong if shares should be trading at $23 today why are they not oh it's a good question Scott I mean uh you know given that it's a growth like we obviously believe that it's a very it's a high growth company with very robust earnings over the next 3 years um you know and it's trading currently at a PE uh of only eight times it's uh it really just doesn't doesn't
• 04:00 - 04:30 make sense to us I mean we've heard obviously different ideas that suggest maybe why it's trading at such a low multiple but no ideas that I uh or I think any of us think are any good which is why we're so uh adamant about uh the opportunity for the company to uh to to be able to take advantage of that and buy back more stock now yeah Dave you make the case you know clearly that you think one of the reasons Apple's Trading where it is uh is because it's under
• 04:30 - 05:00 owned uh by mutual funds uh and otherwise correct uh that that that that that is true uh you know mutual funds uh in general the managers of the mutual funds are are paid based on assets under management um and right now couple of different outfits that published research about how underweight the large actively managed mutual funds are in
• 05:00 - 05:30 apple um and to the extent Apple outperforms the S&P 500 those managers will underperform the S&P 500 Index which they're compared to um so we think that that will be a uh potentially a major Catalyst as Apple proves the myth regarding commoditization with regards to its products is false over time as they have over the last couple years uh
• 05:30 - 06:00 the premise as to why those funds do not own Apple at an equal weight or overweight position uh should be a trigger for them to buy more shares Carl um what's interesting as I said the letter is so specific except it doesn't say what size of a buyback you guys would like to see a year ago you were very specific you wanted $150 billion buyback what about this time what's the number uh you're asking me
• 06:00 - 06:30 you know I'd love them to go all in but obviously they'll never do that that's my nature on this one uh but I would like to see them do a massive tender offer I think if they did that uh it would be very helpful to shareholders that stick with it you know as we've said we would never tender into it sure and we so so if they did a Dutch tender or a massive tender and I I could say as much as a hundred billion dollars okay and I think this would really change the whole Paradigm and make this one of
• 06:30 - 07:00 the well I think it's going to be one of the great companies anyway of of the next of of the next few decades and of the last few reminds me of IBM in the old days you know where people really got involved with and they would keep it in their basement their safes and never sell their IBM and I think this company is somewhat reminiscent of that but obviously many many years later and U we would like to see that and u you know I
• 07:00 - 07:30 did talk to Tim Cook I I called him and I told him this letter was coming and I I obviously confidentially sent it to him and I said to him you know Tim that um you know uh first of all I asked him if he if he still believed as he did a year ago was undervalued and he said yes he does he thinks it's very undervalued uhhuh uh but but then after that I said you know it's really this should be done it was a very friendly conversation it always is with him sure and uh obvious
• 07:30 - 08:00 he was not committed he has to be but as an old poker player I put all my chips into the Pod concerning the fact that he that they will do this buy back but that's just me I want to make you clear with my instincts believe in it I I can't say in any way that Tim uh you know gave me the nod but you know sometimes you go by instincts and did you did the way somebody is talking without did you call did you did you guys discuss a number you threw 100 100
• 08:00 - 08:30 billion here actually actually uh I can't really recall if I did I shouldn't say no I I just can't recall that uh uh Scott uh and I'm being very candid with you I I um I understand but you've thrown you've thrown a 100 billion out on this program just now let me let me um get to Apple's respon you know maybe I'm exaggerating a little bit but you know that's what I'd like to see I I just think that
• 08:30 - 09:00 uh looking at this company and and and you know I don't say this Lively we've been in many companies I've been in many companies all the years and uh your instincts just tell you sometimes when you see a great one and uh uh you know I've made money with some of the great ones over the years but uh this is in that category and I can't say it strongly enough uh now could I be wrong sure I mean that's what markets are but uh luckily I have haven't been wrong all
• 09:00 - 09:30 that much so I and and I haven't been wrong too often when I really you know take both hands and and buy it and that's why we have so much stock right so speaking of the stock that you have um Brett and Dave and this is the biggest position I I believe you guys have ever had um so that certainly speaks to the level of conviction that you have in this company and the case that you've laid out today um I'll ask you first Brett have you guys bought any more stock recently uh not not very recently no so
• 09:30 - 10:00 your position is roughly this how big at this point well we as as as as a firm we own approximately 53 million shares we haven't sold a single share of our Apple investment despite the over 50% appreciation you've seen so far and as you've seen in the letter we just laid out to the company we think the stock today should be trading at twice where it's trading in the market today and we laid out very rationally as to why we
• 10:00 - 10:30 think that is the case to the company um and encourage them to use some of the 164 billion dollar of cash that they have sitting on their balance sheet earning nothing and use that money to buy their stock which we think is trading at half off where it should be trading today and we don't think those numbers are uh aggressive those are our beliefs as to what they should be doing based on the product set that they have
• 10:30 - 11:00 today and the track record of innovation that Apple has had over time Carl um let let me ask you about you know the issue of if you're so convinced that apple is such a great company that Tim Cook is doing such a great job that you have such great belief that he's the right person to do this job why don't you just let him do his job and to help me answer that I want you to listen to omega's Leon cooperman who I know you know I
• 11:00 - 11:30 know you respect him he respects you as well he owns the stock he like you believes it's undervalued he was on squawkbox this morning and he made a comment about sort of how public this has become let's listen to that and let's react on the other side I don't know about all this Public Communication you know uh I he's he's terrific okay but I maybe he was on with Scott wner and they got into a little tiff and Scott was asking a question and call say I want to talk about what I
• 11:30 - 12:00 want to talk about not what you want to talk about I kind of believe water seeks its own level he should have a private communication with the company what's the reason for Public Communication Carl do you you want to respond to that why does this have to be public through letters and otherwise why not just a private conversation between you and cook yeah you know I certainly respect uh Leon and uh so I don't want to argue too much here but I I Just Disagree in the philosophy of corporate governance
• 12:00 - 12:30 owners should have things to say not to micromanage we've been extremely uh successful in companies that Leon's owned actually and I think Leon has said to me that without us being there in certain cases uh it wouldn't have happened and it's been public it is public because boards are human beings and sometimes they need a little pressure in other words I've said that to some extent
• 12:30 - 13:00 the system is dysfunctional and I would tell you that if this was a private company if this is a company I owned I would buy the stock now how do you get aboard to do something and and I'm not saying this in a derogatory way about apples board because I like apples board because apples board kept Tim Cook and there was some criticism of that if you remember we we were very strongly behind Tim Cook a year ago it was talk about nayay as a about Tim and the board did keep him and
• 13:00 - 13:30 so therefore they acted responsibly so this is not one like in many companies you heard me uh really criticize the board so I'm not doing that but I think it is extremely important to get to the shareholders the owners and say you know this should be done and board this is what your shareholders feel should be done and the more shareholders that join in in this endeavor the more chances that it will be done and I think Leon uh Co cerman would agree that if this is
• 13:30 - 14:00 a great company shold is extremely benefited by having a a big buyback you're sitting with $135 billion and you was a board member and I think Kim has said it's very undervalued why not buy a lot of stock and if you just go whisper to him as a little you know mey MTH person and just go in and say oh I don't want you to be man me but please would you listen to me it's
• 14:00 - 14:30 certainly not going to get the reaction that it's going to get when you write a public letter and so uh I mean it's sort of ironic because Leon sort of agrees with a lot of stuff I do but uh want to make it clear I respect Leon he he made that he made that he made that point clear as well uh related to you but I think he's asking or making a point that you know others have made U as to whether this is is the correct approach or not let let me ask you I I
• 14:30 - 15:00 will say it's it's certainly been a successful approach and I don't think the billions and billions of dollars I made for the you know maybe million shareholders or millions of shareholders of the companies I've been involved to would tell you that it's a bad approach let me me say that Scott I can add one point to that it's that the you know the company last time around also said that they solicited uh feedback with respect to our request for BuyBacks uh solicited feedback feedback from other
• 15:00 - 15:30 shareholders so obviously you know we like to we'd like to make this uh as widely read among the the shareholders of the company as possible in advance of that and we hope the D shareholders will you know bother to write a letter or or write write to them to say that they can do I mean this is not in any way micromanaging which I would never do especially in this company and especially as well as they have done and as uh much as I respect them but this is
• 15:30 - 16:00 more of a financial question and to me you know I look at things real simply as I said the simple or the better it's simple it's almost crazy not to use that money to buy something if you really think it's undervalued and and it's not like you know our critics before said well hey then they need money to do Capital spending they don't need money to Capital spend they got plenty of money to do that and they're doing it and they've done a great job I mean it it's nothing taken away from this company so should
• 16:00 - 16:30 and they actually have I mean you got you got to realize that they cash the overall cash position is still still at 133 you know uh billion net cash even after the buy bags that they've been doing right so it's just it's just indicative of how much cash flow the company generates would generates which gets right back to our point of how strong the earnings are and in a situation as we predict where the
• 16:30 - 17:00 earnings will continue to grow that's just going to be exacerbated from a balance sheet point of view where more and more cash will grow let me ask you a just a fundamental question we try to make this a little bit interactive and we had one of our viewers tweet in U a question which I think is is a a good one and I'm sure you'll have a response to it and they say why should any company buy back stock when the price is at an all-time high and you've got a falling Market we're having this
• 17:00 - 17:30 conversation literally when the Dow Jones Industrial Average guys is down 250 points markets are more volatile now than they've been in many many many months what's your response to to a question like that I I think it's an interesting question and you know we are looking this for the long pull I'm you know a year ago when I bought this stock uh to div digress a little bit uh uh you know there were critics that said oh you know ion smart guy and he wants
• 17:30 - 18:00 to get out so he's writing this letter since I wrote that letter and after I wrote that that tweet that tweet that the stock went up I don't know $ 14 billion do or something you know I not only didn't I sell but I bought a lot more stock right so I am in this for the long pull people say I don't go for the long pull I own things 15 20 years Apple to me you know obviously anything could change the world changes this could change that could change it change your mind on things so I
• 18:00 - 18:30 I'm but but I'm in this because I think apple is going to double I'm not in it dayto day and and so it's almost the opposite your criticism well why do it today I'm not a I really don't trade stocks very much and I've owned stocks 15 years 20 years 18 years right could took me four years on Forest labs and we just made a billion and a half on it we we have you have down days we have down days a lot of them I mean you know we own energy stocks and they're getting
• 18:30 - 19:00 killed I'm not arguing about that but nobody's smart enough to know when do you buy at the bottom and when don't you and hey I'm not telling Apple go spend hundred billion dollars tomorrow and buy the stock I am saying this is a great opportunity to buy this company and hey I'm not going to pick the day you buy it but this is and and and you know in this case you look at the stock that doubled a lot of cases that that criticism would be right you know the stock double don't buy it but in this case is the reason it
• 19:00 - 19:30 doubled it was so damn cheap to begin with number one and number two the iPhone 6 is a watershed event I think the the iPhone 6 and the new iPad that's coming or whatever we hope is going to has differentiated this company so that you can't catch it you know we we equated it analiz it to the stock to the to the horse Secretariat right where I remember watching with the Bellmont I'm not a great fan of of horse Racers but I
• 19:30 - 20:00 love seeing you know somebody something great or some great player you know and I love seeing that Belmont race where he moved ahead 31 lengths 31 lengths at the Belmont which is unheard of I I I remember being a young guy and and go to the LTB window and take it a lot of money and bet it on Secretariat right and I remember it to this day and I really equate that to Apple I think apple is just moving ahead of the pack and now is the time to catch them you know and and that's all I'm saying but I
• 20:00 - 20:30 can't tell you uh you know that today is the day to buy it probably it isn't you know I want to bring back in Carl and Brett icon David sheer as well all three joining us today on the phone as you know Carl you you've been concerned about the market you you've expressed it publicly uh again you know down 270 up 270 now today down another 270 what are your thoughts well as I said I I've been quite concerned for the last year or so
• 20:30 - 21:00 but you know we still have a hell of a lot of stocks in our portfolio so you sort of root for the upside but I have a lot of Hedges on I've been putting on quite a bit of Hedges you know shorting the S&P and the CDs on the high yield U my major Hedges and I am concerned about this whole economy I I don't think you can keep an I've said this for the last year or so you can't keep an economy up just with the fed the FED alone can't do it and and you know Dr
• 21:00 - 21:30 harp on it I I think that uh one of our problems in the country is that that well we have great CEOs and great boards too many of them are are mediocre and uh that is one problem but uh but do you fear do you fear a big correction like a you know the correction people have been talking about for some time Carl that hasn't come to fruition do you think it's coming yeah no I've I think it it's def abely coming it's just a question of when and and that's the point I mean is
• 21:30 - 22:00 it this moment or not and you know you see what what would really uh what really INF influenced me a little bit is you know when you see everybody getting sort of bullish and all all the economists are telling you things are good and everything's wonderful that's when you got to start watching out but I'm not telling you I can pick at all when it's going to happen and there's some good stuff coming out obviously the economy and whatever but uh I can't pick when it's going to
• 22:00 - 22:30 happen but it will happen and uh it's it's a so is it today you know I don't know it feels like you know feels like to to many people that maybe we're we're in the the the beginning throws of a of a bigger pullback the likes of which we had haven't seen in a long long time I tell you it's it's one area when you start picking exactly when a Market's going to move up and down you might as well pick up when the farm is is going to shoot another seven in Vegas you know
• 22:30 - 23:00 I I don't think anybody can there too many variables to pick uh you know what is the moment in time but you can't on a m macro level right look at it and say hey something's got to give here hey Carl okay I want to ask um I want to get to Netflix in a moment with with Brett and Dave um but I want to ask you about eBay and PayPal you're very public clearly uh in your desire for those two companies to split they now have made the announcement that they will even to
• 23:00 - 23:30 your surprise that it happened as soon as perhaps it it it did Mark andreon is on the board uh you guys had a little thing going uh on Twitter and otherwise uh critical of one another he took a big shot at you yesterday on this very Network he criticized you personally he criticized your method of activism you want to respond right here and now yeah you you mentioned that to me uh last night and I went home and I watched what
• 23:30 - 24:00 he uh what he said and you know I I'm no great fan of andreon and I tried to listen to him but he talks in that high squeaky voice and you know only a dog can really hear him in my opinion and really get what he's saying but I sort of picked it up and um you know when it comes to andreon uh you know I I sort of inherited a sense of outrage uh for my father father you know in the sense of getting in sensive guys
• 24:00 - 24:30 like Andre who you know take this holy of now attitude uh uh but while they're doing this they they're literally and andreon really stands out and this just abates his fiduciary duty and um and and and and uh I I just get incensed I mean maybe the risk of sounding corny I get I get enraged at at that type of thing and I went after him pretty hard uh uh you
• 24:30 - 25:00 know for for literally stealing Skype from eBay uh you know he he uh in my opinion he knew uh Microsoft was very interested in Skype he went out being on the board and uh the Skype had a a value of uh of 2.7 billion when he went out and and bought bought a fair amount of it I think 65% 18 months later he sold it to
• 25:00 - 25:30 eBay for 8.5 billion now don't you think there's something wrong with that and don't you think he and and yet he's still on the board and still um you know taking the sense of a of of a high morality it's sort of amazing with a guy like that and there are other guys like that right but I mean he made a pretty personal attack I mean you know he didn't pull many punches Carl well with me I mean look in fact I'm I'm uh I I'm sort of I'm sort of glad he did
• 25:30 - 26:00 it in a way it's sort of funny because I think he's really mad at me because um uh I I I have been a force obviously and and and I'm proud of myself to be in this and I say you know the risk could being a modest a force for getting them to split that stock he has been a force for not getting them to sell off eBay and I really believe being that I'm a cynical person I believed he's really mad at me for doing this cuz I really believed he was planning to steal PayPal just like he uh stole Skype
• 26:00 - 26:30 I mean that's what he does that's the kind of guy he is and uh guys like that I just can't abide I mean and uh I can understand him being mad at me because I might have taken a shot to to get PayPal and by the way that might make me sort of happy because he probably knows he probably knows that there's a couple of guys waiting out in the weeds a couple of his buddies that want to buy uh they want to buy PayPal at a big premium so I guess that's good maybe maybe someone wants to eBay now is that what you're for you're still in the stock hey you
• 26:30 - 27:00 know I I look the Andre's actions he's so mad at me for for I think for doing this kind of thing that he takes these personal attacks and I interestingly uh uh we we had this um non-disparagement agreement you know when when we made the deal with eBay so he uh but that's what he does also he just ignored that the fact he has it and he broke his covenants and now now that he disparaged me I guess I can say what I want about him and uh you know we had
• 27:00 - 27:30 uh we had a 220 request going on whatever happened with Skype and uh we may consider putting that back into play now that he's decided to break his covenants but he does that you know he breaks things like that I mean he's sort of a uh you you know there there are great CEOs and great board members you know I would say again like Tim Cook is on one side of in Silicon Valley you know Silicon Valley they're they're interesting people and they on both
• 27:30 - 28:00 sides of that Continuum again I'll say Tim Cook's on one side Andre's on the other and and some of these guys like Andre you know I mean you know it just gets you great I mean Andre it's a sort of known fact Andre he screwed more people than Casanova for Christ sakes and yet he goes and he takes this attitude that he's on the high moral ground and and uh and and it's just as annoying as hell to me that a guy like that is still on this board
• 28:00 - 28:30 after what the hell he did on at Skype let me let me let me let me switch to to Netflix um if I could and and Brett and Dave that's that's where you guys come in um Carl has has certainly credited you guys on more than one occasion including at our own delivering Alpha event uh in interviews with me in the past are you guys still Brett in Netflix yep we're still definitely in Netflix um it actually is uh I was thinking about the point that you made
• 28:30 - 29:00 before about the guy who tweeted about the uh you know why buy Apple at you know this price since it's like uh almost uh all-time high and um you know obvious it's it's interesting because with Netflix we bought it at we started buying it at 68 and you know all along the way we've you know faced criticism like that from many people saying you know that we why hold it on it just doubled and it doubled again and you know we we just
• 29:00 - 29:30 continue to have a very strong thesis about the company's growth and about everything that they were doing right and why it's uh why it was going to be worth what uh I don't want to pick a specific Target now but obviously it's all the way up to where where it is now in the 4 you know high 400s and it's uh it's something that we continue to uh old and we think I mean I still think it's uh as I wrote we wrote in a letter
• 29:30 - 30:00 once one of the greatest uh consumer Bargains of our time and um they have uh you know you have great growth domestically and internationally from and uh and great operational leverage of that company because the fixed costs are pretty much static to the extent that they choose to keep them static right I want to I want to be clear too I mean not only not only you are you are you still in it you guys have sold a a single share I mean Carl made it clear in the past that he sold some of what he
• 30:00 - 30:30 had you guys have not sold a single share is that right we we have we have the vast majority of our position it's uh a 30% position in our portfolio that we manage at Sargon including the derivative so it's a it's a huge position for us and we are uh but do answer your point directly we that we shared a year ago very much holds true today and the right way we think to look at
• 30:30 - 31:00 Netflix is to look out into the future because as Brett said it's a company that has the biggest cost being content and content is fixed so whether there's 200 million subscribers or there's 40 million subscribers the same set of content cost the same amount of money so as this company gain subscribers there's massive operational leverage and that's why the critics of Netflix have been wrong and then saying that the company
• 31:00 - 31:30 makes no money because it's not really relevant what's relevant is how many subscribers are they adding over time to get to a level uh that justifies the uh leverage in the business model okay uh guys I want to thank you again for joining us uh again Dave sheer Brett icon Brett by the way a name to the next list uh here at CNBC urge you to check out the entire list on our website Carl I I'll let you go with my last question and try and make your answer brief if
• 31:30 - 32:00 you could because I want to get back to covering what's happening on Wall Street today last time you said that you would test the waters perhaps in a proxy fight with apple if you didn't get what you wanted what happens if Tim Cook says thanks but no thanks see you later what are you GNA do there will never be a proxy fight with apple and me Tim Cook has performed admirably the board has acted responsibly and if they don't do it hey I'm still their buddies you know
• 32:00 - 32:30 they when you make a couple of billion dollars out a guy's stock and he has performed as well and as as greatly as they have with these products I'm their buddies and there's never going to be a proxy fight so I am just doing this and I think I and I hope that and I've had good talks with ktim that he respects me and is listening to me and uh uh that's all I can say about it all right Carl I appreciate for uh certainly for joining us Brett and Dave uh again from the
• 32:30 - 33:00 Sargon portfolio annualized gross returns of 36.5% uh since 2010 we'll talk to you guys soon I hope thanks again