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Apple most-valued company ever, but that's not enough for Carl Icahn

The activist investor, who believes Apple shares should be valued at $216, called for Apple to boost its buybacks, using its huge stockpile of cash.

Apple CEO Tim Cook says his company will provide an update in April about its plans to return cash to shareholders. Justin Sullivan/Getty Images

Billionaire activist investor Carl Icahn thinks Apple, already the most highly valued company in the world, is still a bargain.

Icahn believes Apple's stock should be worth $216 a share, for a jaw-dropping market value of $1.25 trillion, based on today's outstanding shares. Apple shares closed at $122.02 on Tuesday, making it the first company to close a trading day valued above $700 billion. Shares rose another 2 percent Wednesday.

Icahn -- who owns $6.5 billion worth of Apple stock -- on Wednesday encouraged Apple through a letter posted on his website, Shareholders' Square Table, to use its roughly $178 billion cash pile to boost its share buybacks, saying the repurchases will help boost Apple's "dramatically undervalued shares." He also patted himself on the back for making a similar plea in 2013 -- Apple did increase its shareholder returns around that time, and Apple's shares have surged since then. Icahn said he's so bullish about Apple that he owns 53 million shares in the company and hasn't sold a single share.

Icahn has been known to take large positions in companies and agitate for change, whether it's increasing a stock repurchase plan or breaking up a firm. He's successfully called for breakups at well-known companies such as Motorola and eBay.

Icahn isn't looking for a dramatic shift like that at Apple. He claims Apple could use its cash to raise its stock value to his target price. For Apple's part, CEO Tim Cook said Tuesday that in April his company will provide an update on its plans for returning cash to shareholders.

Billionaire investor Carl Icahn says Apple is undervalued.
Billionaire investor Carl Icahn says Apple is undervalued. Heidi Gutman/Getty Images

While the $1.25 trillion figure is sexy, it's only a theoretical number based on today's outstanding shares. It's hard to tell from the letter how many share buybacks Icahn is factoring into his numbers to get to that price target. Repurchases reduce the number of shares outstanding, helping push a company's stock price higher, even while its market value stays the same.

Apple didn't immediately respond to a request for comment.

Icahn ends his note with something of a love letter to Apple. Granted, he's hardly an objective observer, but here's part of his statement: "It is now plainly obvious to us that there will be no stopping Apple's peerless innovation track record and best-in-class ecosystem of services, software and hardware, and that Apple will continue dominating the premium smartphone market...while at the same time maintaining or growing average selling prices and gross margins."